Posted by Jeff on October 21, 1998 at 09:40:46:
I’m currently involved in a program that could be of some help. In essence it’s a seller financed 1st mortgage for anywhere from 65 to 90% that is sold at the closing table. There is no problem setting it up so that all transactions are simultaneous. (i.e. your purchase from seller, and then you becoming the seller. You would then be the party creating the owner financed mortgage) This allows the seller to payoff any underlying 1st. There is a second created that will be paid to the seller. The 1st mtg. must be structured specifically in order to have it purchased with this program at the closing table. They have just started allowing the sell price to be raised above appraised value in order to compensate for the discount of the 1st mortgage and all fees. This allows the seller to receive the entire 1st mortgage price without apparent discount. The program is almost entirely FICO score driven, with scores as low as 500 being eligable. There are no debt ratios, no minimum income requirements, or requirements for where the down payment comes from. (except it can’t come from the seller) The information is rather lengthy to post here, but you can send me your info by email and I will send you what I’ve got. If you send approximations of what the sale price is, the appraised value of the property, the type of property, the expected FICO score on the buyer, and expected down payment I can give you an idea of which area of this program you could use.
It should be noted that a small second mortgage behind a large first mortgage (with high LTV) will be hard to resell. You would be required to take a very large discount if it were to sell at all. You might do better just to keep it for the cash flow. The terms of the second are completely open to negotiation between the seller and the buyer. It does not effect the 1st mortgage or this program at all.