due-on-sale question... - Posted by kv

Posted by Eugene Lewis on September 22, 2000 at 01:54:53:

Yes, as a matter of fact, I have. But only once ! It was Society Bank. The loan balance was only $15,000.00, and the fair market value (at that time), was $80,000.00. I always wondered, who at the bank (or friends of), really wanted this particular property. The bank tried to derail me at every turn. Refused to accept the mortgage payments, refused to reinstsate the loan, and “foreclosed”. Fortunetly, I sold the property, before the auction got even close. Walking into that bank and paying-off that mortgage, was the most fun I have had with my clothes on. Someone, at that bank was surprised. So, to Goliath I say, come on with-it!!!

due-on-sale question… - Posted by kv

Posted by kv on September 19, 2000 at 14:52:23:

Reading Bronchik’s article on “due-on-sale” clause (part I), Bill says that the most common ways banks find out about “sale” is when the hazard insuarance on the property is changed from the old owner to the new one…

  1. In addition to the thread generated by Bronchik below, titled ‘“subject to” and insurance’, are there other ways to conceal the sale?

  2. Has anyone here had experience(s) triggering due-on-sale clause? What was the reaction of the lender? What do you think you could have done to change lender’s action?

Thanks,
kv

Let’s Have a Show of Hands … - Posted by Rick Wheat

Posted by Rick Wheat on September 20, 2000 at 06:42:49:

from ANYONE who has had a PERFORMING loan, current in every way, called due because of a violation of the Due-on-Sale clause or a “Subject-To” sale. I’ve never had one, or even heard of one, but I’m SURE they are out there, aren’t they???

Let’s hear from you!

GOOD LUCK!!!

Rick Wheat

Re: due-on-sale question… - Posted by Bill Gatten

Posted by Bill Gatten on September 19, 2000 at 18:16:53:

Jim,

Good question…regardless of how many times it’s been covered here on CRE. That’s the reason we’re here…to help and to answer the new comer’s questions, as well as those of the old moss-covered pros who’ve seen it all.

I’ve had DOS calls on my own property (waaay back in the beginning) and I’ve been privy to several others by other folks.

However, except in a few rare cases where the lender specifically set out to find reasons to rejuvenate their portfolios prior to a sell-off to another institution (e.g. to rewrite their poor performing and low interest-rate loans): NONE of the calls (including my own) would have occurred if the mortgage payments had been kept current, the insurance in proper force, and the property taxes up to date.

In my own two cases, the DOS calls occurred because I dilly-dallied too long before making my first payments on a couple Wrap-Arounds that I did in the mid 80’s (I thought he was paying: he though I was paying, and, hey?nobody was paying).

As Bill Bronchik says below (AT LAST agreeing with a point I?ve tried to make a dozen times in the past): the DOS is not a serious threat or cause for undue concern, unless interest rates were to shoot up sharply; unless a particular lender was trying to polish up its loan portfolio to sell it off (or to sell the bank); or unless you were to wag you unauthorized transfer, with a chartreuse bow around it and bells dangling from it, directly in front of a servicing agency?s “FHA, VA, FNMA and GNMA ?By-the-Book” face.

Suggestion: Avoid the DOS as completely as possible by not violating it…e.g., put the property in a co-beneficiary land trust and deal with matters of Beneficiary-Interest, rather than with matters of title. In other words, don’t sell, trade, transfer or hypothecate the lenders real estate loan security: Instead sell, trade, transfer or hypothecate the personal property interest in a trust into which the property has been legitimately placed?whether the lender would like it or not.

Bill Gatten

Re: due-on-sale question… - Posted by Jim IL

Posted by Jim IL on September 19, 2000 at 15:45:02:

kv,
This topic has been discussed here more times than I can count.
If you want to “Catch up” on some of the info provided, try the archives here.
Type in “Due on Sale” and I’m sure you will get HUNDREDS of posts pertaining to it.

Hope this helps,
Jim IL