Posted by David Alexander on May 11, 2000 at 10:32:02:
You leave it in place and put that escrow amount along with the escrow language into your note. That then becomes the Buyers Responsibility and the TI just continues to get paid.
Payment of 600/month 500/PI 100/TI
Their payment to you
800/month 700/PI 100/TI
Nothing more magical to it.
David Alexander
Escrow Accounts on Underlying Loans - Posted by Steve Carlson
Posted by Steve Carlson on May 11, 2000 at 09:20:05:
I have a question about what to do with the escrow account on underlying loans if we are selling using a wraparound mortgage. We assumed a 15-year-old VA loan and want to wrap it with a new 30-year mortgage. However, neither my closing attorney nor I know what to do about the VA loan’s escrow account. The new buyer needs to be responsible for taxes and insurance but I have to pay into escrow with monthly payment for T&I. I sure hate to be paying twice and I do not like side agreements that he would reimburse me or anything like that. Can somebody with experience please help explain the best way to handle this?
Thank you,
Steve
Re: Escrow Accounts on Underlying Loans - Posted by John J.
Posted by John J. on May 15, 2000 at 01:38:10:
Steve, I have several of those arrangements. I do the following:
At closing the buyer also buys the escrow account, i.e. he reimburses the seller for whatever amount is in escrow with the mortgage co. SO he then “owns” this. Then he just adds the actual T&I payments to his payment to you, which you then pass on. When you receive the annual adjustment statement and the escrow payments change you need to notify the buyer quickly of the new amount, so that he can change his payment amount to you in time for you to make the new payment on the underlying loan. At the end of the year, just send him a copy of the statement that you receive from the mortgage co,. so he’ll have it for his tax records. I am doing this with 8 buildings that I have sold on wraparound and it works well.