All Forum Posts by: Daniel Hennek

I think a lot of confusion here comes from commenters in this post being in different states but it also comes from not always reading their contracts thoroughly.  I'm surprised to see someone identified as an attorney saying things like they'll shove that contract down your throat without actually reading the contract with regards to the inspection period and how it plays out.  If you don't read it you don't know; we are all guessing what it says based on norms.

Contracts are different in each state and the AS-IS portion seems to be an area where many states differ.  It's also a portion that has changed for certain states in the last decade.  In AZ there use to be a box to check for AS-IS and brokers would instruct sales people to strike the section about inspection and get both parties to initial if they checked the AS-IS box.  There is no longer an AS-IS box on an AZ purchase agreement.

Usually an inspection contingency/clause reads something like: If there are items disapproved of then the buyer will notify the seller that they have elected to either immediately cancel the contract or provide the seller an opportunity to correct the items disapproved. 

The bottom line is read your contract.  In this case the original poster clearly says they had an inspection contingency.  The inspection contingency would HAVE to be struck from the contract for it to not apply as it reads.  You can't just ignore a clause in a contract without addressing it or stating up front that you are striking it and both parties to the contract agree to strike it. 

Gino,

What are you looking for from members of this forum?

Do you have a wraparound mortgage?  It sounds like a no because if you did the deed would transfer and it would be in your name not your friends.  This is why we need more information.

Matt,

Making assumptions is what you do when you're trying to figure out what's going on. It guides a line of questioning.  One can take a line and still have an open mind that another is correct.  You criticize me for using that investigative technique but fail to recognize that you are doing the same thing.

Also, it's just weird that you say "your welcome" about the Fannie Mae thing.  You made an assumption right there that I didn't know about it if we're pointing out assumptions.  Your reasoning for that assumption was that "it didn't seem like I knew about it" and that was based on the fact that I mentioned the due on sale clause.  One agency changes things about due on sale and suddenly you think that all loans are Fannie Mae?  It's clearly not worth it to continue this conversation.

Gino, share your story more if you want help and don't want this pointless thread hijack to continue.

Gino,

You need to be specific about what kind of deal you entered into.

What do you remember about the deal?  You have a contract?  Can you get it and read it?  What kind of paperwork do you have?

You need to provide more context to get some help.

Matt,

I suppose I was hasty in my comments and could have used more qualifiers such as "most likely he wouldn't be able to sell it to you without paying off his loan" and I didn't include context about how sometimes banks choose to not enforce that clause and they don't call the note due as long as the debt is being paid which could be the case here because it's the bank's choice.

The original poster said they "helped their friend out of a jam" and nothing about building their portfolio. Doesn't seem like were talking to an experienced investor here familiar with wraparounds and with a lender that does them in 2012! Helping someone out of a jam usually indicates it might be difficult for the "friend" to get financing so the chance of the friend refinancing into another loan recently without a due on sale seems unlikely.  However, it is possible...

Fannie Mae's changes didn't go into effect until June of 2016.  We're talking about a possible wraparound consummated before that and an unlikely chance of the "seller" having refinanced into a Fannie Mae loan after June 2016.

There are lots of things we don't know about this situation.  I asked the question "did you really buy it" because I've talked to lots of people throughout the years that think they "bought a house" from a friend or family member.  The truth is we have no idea because Gino didn't provide much context.  Therefore I didn't provide much other than a proverbial kicking of the can to get more info...

Wrap around mortgages are fairly uncommon in general and back in 2012 when he "bought" the property they were virtually non-existent.  You are making an assumption that someone is referring to a loan that was exceedingly rare at the time they "bought" the property.

Be wary.

Most people who try and call themselves mentors in any real estate related field are really just selling you something or trying to get a piece of your hard work without actually contributing to your bottom line.

It's a red flag to me when someone who is supposedly your competition wants to mentor you.  He's a Realtor so he can get a commission on your properties but he's an investor as well so is he really going to find you the best deals or keep them to himself and pass you the leftovers.

He would be an idiot to give you the good deals instead of keeping them to himself don't you think?  Red flags

Sounds like you're confused. 

Most mortgages have due on sale clause's that would call the note due upon sale of the house so did you really buy it? 

He wouldn't be able to sell the house to you without paying off his loan...

You might try using this link for the National Association of Mortgage Brokers.

https://mms.namb.org/members/directory/search_namb.php

or google "namb find a broker" and select the second result if you don't like clicking links people post.

A lot of mortgage brokers are going to do both QM business, referred to in the past as Prime, and Non-QM, referred to in the past as sub-prime.  Have you contacted the broker that did the deal on your home for you?  That would also be a good place to start.  Even if they don't have a product for you right now, it might give him/her an opportunity to find a new lender to work with.  They might not be able to set up new products themselves but they might be able to find one and convince their boss to sign up with that lender.

Sounds like you may have gone down that road though if you've gotten referrals?  I would call other mortgage brokers and look for people who specifically advertise themselves as a broker.  You're not looking for a "direct lender" or a "hard money" lender, you're looking for an independent broker that can submit loans to multiple investors.  We can have as large of a product line as we can effectively handle so it's up to each broker to decide how far they are dipping their toes in the non-QM pool.  I have my email blowing up almost daily from private money investors looking to sign me up so there's got to be someone around you that knows something and I suggest your best bet at finding it is to use an expert at finding it.  There can be a lot to sift through on all these products I'm bombarded with daily and they have their special features.  

A good MLO is going to show themselves to you right away by not leaving you hanging, making sure you don't get the run around, and promptly responding to your communications even if they can't help.  Unfortunately there are a lot of MLOs that give the industry a bad reputation so if they're not calling you back don't hesitate to move on because you probably don't want to work with them anyways.

That's what many of us said in different words; read carefully.  Glad you got it worked out, it's an important one.

Any lender charging money up front more than $500 is highly suspect, no exceptions. That's called a red flag.

There are plenty of mortgage professionals of all types that all want to find you a loan with absolutely no upfront costs besides you paying an appraisal, which doesn't go to the lender.  

Hard money/Non-QM loans are going to want to make their fees upfront because they just aren't going to be profitable enough based on interest because they are short term loans.  However, any decent lender won't charge those fees until consummation of the deal at closing.  If any lender ever asks you for more than $500 up front, mostly for an appraisal, then look elsewhere because they're not a lender. Lenders make money when deals close, they don't make money off upfront fees outside of closing.  Go with a lender that aligns with your interests and doesn't get paid until closing; they get paid when you get what you want.