How do you "sell" a performance mtg? - Posted by J.P. Vaughan

Posted by ScottS on September 04, 2001 at 19:39:17:

I also use the insurance as a reason to get the “performance mortgage”.

I heap all my documents together (which by the way make the PACTrust list I saw the other day on the board look pretty slim). I put it in the stack directly behind the Quit Claim Deed that I sign to protect the seller so they are oh so happy I have considered their protection.

“And this document allows me to get insurance and puts me in the chain of title just in case something very negative, God forbid, happens in your life like a judgement or something. At least any person with an interest comes after me.”

It’s worked everytime since I have started using them which I think was on my third deal.

Another good one I have heard which I have tucked away for those who think they might need more. “The other good thing that goes along with that is should someone try to sue you for something and the total price adds up to WAYYYYY more then what your property is worth they may think twice about sueing because you owe more then the house is worth, at least on paper”

ScottS

How do you “sell” a performance mtg? - Posted by J.P. Vaughan

Posted by J.P. Vaughan on September 04, 2001 at 13:19:43:

Some comments in other posts got me thinking this could make
a good discussion topic.

How do you get a seller to agree to a performance mortgage?
How do you explain it? How do you “sell” it?

Thanks is advance for your contributions.

JP

Performance mortgage as asset protection - Posted by Tim Jensen

Posted by Tim Jensen on September 04, 2001 at 22:13:48:

Hi all,

What do you think of using a performance mortgage(PM) as an asset protection device?

I would like to get your ideas. Like using the PM to secure your wifes option to buy a property that your LLC owns or something like that.

I would love to hear your ideas!

Tim

You Don’t… - Posted by David Alexander

Posted by David Alexander on September 04, 2001 at 17:32:38:

You buy the with cash or subject to, Lol. You let the other folks have the unmotivated sellers…

Sorta like Piper said, this is the way we do business, if you can do it this way then great… if not…

Now on the otherhand I did my first deal into a Pactrust the other day, thanks to Bud… A deal I might have pssed up… at least for a week or so until they called me… and said lets just do this.

David Alexander

Re: How do you “sell” a performance mtg? - Posted by JoeKaiser

Posted by JoeKaiser on September 04, 2001 at 15:14:28:

“My insurance broker requires me to have a recorded interest such as a mortgage before he’ll allow me to place insurance against the property.”

End of discussion.

Re: How do you “sell” a performance mtg? - Posted by JPiper

Posted by JPiper on September 04, 2001 at 13:46:55:

Hi JP:

What’s the deal? You forget about the archives?? LOL.

Here’s a post I made on November 30, 1998.

Selling The Performance Mortgage…
[ Follow Ups ] [ Post Followup ] [ CREOnline News Group ] [ FAQ ]

Posted by JPiper on November 30, 1998 at 15:15:04:
In Reply to: Re: Other reasons for performance mortgage posted by Joe Kaiser on November 30, 1998 at 14:27:56:
Just a few thoughts on selling the idea of the performance mortgage.
Most of the ?performance mortgages? I have written in the past have primarily had to do with unrecorded AITD?s, not lease/options. I have had no difficulty at all with the concept here. It was presented as one more item in the paperwork that needed to be signed, along with deeds which were to be held by an independent party, and the deed of trust. The ?performance mortgage? was presented assumptively?.in other words, this is the way it?s always done.
I haven?t done as many lease/options as a buyer, and the problems presented with this type of transaction are somewhat different. Again, however, the tact I have taken is assumptive. It?s just the way things are done. I don?t answer objections unless the objections come up. But what I have found is that the objections I have received are objections that can be handled.
Here?s one objection. ?If you don?t exercise your option, or otherwise perform your agreement, this performance mortgage is a problem.? Solution: As the optionee you execute a release to this performance mortgage which is held by the independent escrow agent along with instructions as to when this release should be recorded.
Another objection. ?I might want to refinance my property, but this performance mortgage will inhibit that process?. Solution: Insert a subordination clause in the performance mortgage in which you agree to subordinate to a new first up to a presestablished limit which does not affect your interest.
I know these are not all of the possible objections. But what I have found is that a careful questioning of the optionor?s objection reveals a problem with one of the above. Again, I don?t bring these solutions up unless the optionor brings them up first. The assumptive technique has worked well for me.
JPiper

Re: You Don’t… - Posted by JPiper

Posted by JPiper on September 04, 2001 at 20:04:22:

David:

What was there about this “deal” that you would have passed up before, that changed because of the PacTrust?

Re: How do you “sell” a performance mtg? - Posted by JPiper

Posted by JPiper on September 04, 2001 at 16:19:26:

I agree with your statement Joe. I use it myself. But the problem with this is that this ONLY explains why. It doesn’t necessarily persuade the seller to do it.

My suggestion would be to use this statement. But this is NOT necessarily the end of the discussion. If at this point, the seller says “So what?”, you’re going to have to put some type of different hat on.

My contention is that the primary reason that the seller would not want to record a performance mortgage is that he is either 1) concerned with title issues in the event that you default or 2) it reduces his freedom in terms of possible future financing.

Answer these concerns, and the seller will likely allow you to record so that you can get the insurance.

JPiper

Re: How do you “sell” a performance mtg? - Posted by diana

Posted by diana on September 04, 2001 at 17:19:40:

The performance mortgage is the one thing I have had a hard time figuring out. Is it just a piece of paper that records each payment by the buyer? Is the title company the one who takes care of this duty? So it’s like a third party (witness) keeping watch?
Thanks

Re: You Don’t… - Posted by David Alexander

Posted by David Alexander on September 05, 2001 at 02:35:22:

The people wanted assurances that if I defaulted or didnt perform that they would have a way back into the property.

the deal was in Ft.Worth a ways away from me so I called Bud and he closed it up with a PacTrust… which gives them some recourse.

David Alexander