Posted by Antoinette on March 16, 2001 at 20:57:06:
Thank you for your response. Unfortunately I did send them my information which turned out to be none other than an application for an un-assumable FHA mortgage. I guess you live and learn. I now realize that the best decision to start the real estate buying process is to place my own ad in the local newspaper targeting motivated sellers. The company I sent my information to who claimed to be involved in “creative financing” told me that investors are required to put a minimum of 10% into the purchase of a property. I know this cannot possibly true. Can you explain? Also, once a seller agrees to certain terms to buy his/her property where does one obtain an " Offer to Purchase" form to bind such an agreement? Is a certain amount of money needed to bind such a contract?
Posted by Antoinette on March 15, 2001 at 18:18:26:
I called an 800 number which claimed that I could buy properties with no money down. I assumed the company was involved in creative real estate just to find out that I still had to send them all of my financial documents to apply for a mortgage. They did send me some informative documents, however, including one on how HUD has acted to
keep investors from acquiring residential properties covered by certain FHA insured mortgages. This form states that a mortgage sold to an investor without a traditional
credit and income check would be accelerated,and the seller of the property would be liable. This obviously would affect buying real estate creatively. The form is called
" Assumption of HUD/FHA- Insured Mortgages- Release of Personal Liability." Can you please update me on the current laws regarding assuming mortgages, this particular form I mentioned, and possibly how to legally proceed to assume a mortgage creatively despite such a law. I have read many books and gone to a seminar, but this law would certainly hamper most creative real estate techniques if sellers are threatened with having their mortgages accelerated if they sell to investors without using traditional financial background checks.
Antoinette. In assuming a HUD/FHA insured mortgage that was originated after a date certain, FHA, if you ask, requires that the assumer be approved and qualify for the assumption. The current mortgagor, may or may not be released from liability, even if the new assumer is approved by them. This is usually done through the mortgage servicing activity and not by the seller, but may be with his help. If the FHA or servicing activity does not know the property is sold or a “creative R.E. technique” is used they are highly unlikely to accellerate the loan. As long as they are getting paid, they have no incentative to accellerate at all. The seller, if they are the ones on the loan will remain liable, but we know of no “law” that prevents a new buyer from simply continuing to pay the loan. With creative techniques, you don’t want to assume the loan, you just want to see that it is paid. We would recommed you be careful about giving your financial information to a 800 number activity, that advertises creative techniques, before you check them out thoroughly. There is no telling what they may do with that information. You didn’t send it, did you?