All Forum Posts by: T. Alan Ceshker

OR.... And I know I am probably sounding like a broken record at this point but, it's true, OR via doing a Contract For Deed. 

I had one that fit's this literally hours ago. 

I am on listing side of things. Buyer wants to buy Sub2, communicate to seller, who turns out his mortg guy is a life long close friend so said he will only do what he says is a-ok.

I pressed buyer for whay Sub@, what is it he was looking to get at. Control of property, with only ___ down, and payments monthly of ___, for __ term. Ok, simple. I let buyer know, Sub2 isn't only way we can get that done.

Seller checked with finance friend who said C4D A-OK! No issue at all with doing it via C4D. 

Sub2 brings some pretty BIG scarry risk potentials that I just don't understand taking that kind of risk exposure vs C4D.

 That's the beauty of lawyers. They think they know everything and litigate to prove it. One side always loses so at least one of the lawyers is always wrong, or, the other lawyer had a better line of B.S. at least. You lost me completely by your failure to understand that if a buyer approaches a seller and offers to take over their property subject to the lender's lien, and stops paying and puts that borrower into default or, if the borrower was in default already, that "buyer" may run afoul of local/state laws and may be accused of equity skimming. Some greasy lawyer will no doubt jump in and say its not equity skimming, when it is.

Troll elsewhere? You're the one trying to drum up business, and pretty defensive too. Who's the troll?

Nothing you do to put lipstick on this type of transaction matters if the lender isn't aware and supportive, and no, they aren't going to be supportive of a sub to or wrap. There is no right way to do a sub to. There is a reason notes have a due on sale clause, so that they can have a response to a sub to or wrap. You can smoke and mirror and paper them any way you want but YOUR transaction doesn't involve or jump in front of the transaction between the original borrower and the lender. YOUR transaction by its very nature conflicts with the lender's instructions in the note and violates the term of the note between the lender and the borrower.

Yes, people get away with it every day but no, there is no "right way" to do a sub to/wrap because the lender explicitly states and the borrower agrees at the time of origination, that it cannot and won't be done. Just because you do it, and just because you got away with it, doesn't mean you did something the right way. You just didn't get caught.

And god help you if you do it to a borrower in financial distress or if you do it in a state that prohibits equity skimming, requires licensure or registration, or other nefarious acts against homeowners.

Your comment: "We are seeing more issues re lenders calling notes due. Some because of mistakes with insurance. But, some due to lenders looking."

Although forthcoming and we appreciate the honesty, it does not build confidence in the process.

The ramifications are serious, especially when we consider the crowd in the "subto community" and how it's being promoted there. If something could be done to convince the head "guru" that buying overleveraged properties in and of itself is reckless for creative finance, done so that he can boast he has “none of his own money involved” and attract people with little money to join his program, perhaps the trajectory of the conversation could be more positive toward solving the problem.

But, Why would we want to promote his risky & bad investing?

One of my concerns with transferring the beneficial interest to the end buyer is if the end buyer stops paying.

.How hard would it be to regain possession of the property as opposed to simply transferring the deed in the new buyer’s name and doing a standard wrap?

A lot of controversy about lease options here in Texas.  there’s people that claim to be experts saying they’re doable and then there’s other people that claim to be expert saying stay miles away from lease options. 

I can easily answer your question. Our spreads as lenders are very, very thin. We can't afford to be wrong more than a little bit. We attempt to keep delinquency below 0.6%. Of the "three C's of credit", capacity is the most important. Meaning "does the borrower have the ability to pay the loan back". We look for primary and secondary exit strategies for the borrower before the tertiary exit strategy of liquidating the collateral. When this happens, it is usually goes through the court system. This, as you know, takes a great deal of time. The time value of money kicks in for us and we end up taking a bath on the deal. As you've demonstrated a few times in this thread, counsel for the borrower will do all they can to draw it out which costs us legal bills and we're on "non-accrual" meaning we're paying for the money we lent out but we are not getting interest back in. When we loan money, we are betting on the person we gave the money to. We are harmed when the property is transferred to a weaker borrower and when attorneys actively coach these new property owners...owners we never agreed to work with...to bend the law and draw it out as long as they can. You've said that I am "fearmongering and spreading misinformation" and you've implied that your obviously in the wrong forum because, either because you feel some of us can't follow your line of thinking or that we're not providing you with an echochamber of agreement. What specifically have I said that is incorrect? Perhaps we see things differently. I have an attorney friend that I have spirited discussions with all the time. He feels that if something is legal and he can get away with it, then its moral. I disagree. The positions of active concealment you advocate most certainly harm us lenders.