Posted by Tim (Atlanta) on July 13, 2001 at 07:46:04:
Most high LTV second liens on mobile homes are worth nothing. You couldn’t sell that piece of paper at all. My best bet in your situation would be to either hold on to the land contract deal you already have going until the loan is amortized to an acceptable level, or find a buyer who can assume the loan. I think you will have a hard time walking out of this deal with some cash. If you have to sell the home right now, you are going to have to put some cash in the deal. The mobile home dealer market may pay you $20k for the home, but you would have to guage that market for yourself.
I have a 1996 18X80 Palm Harbor that I am trying to sell with little success. I have been looking at some information about selling MH notes. I still owe quite a bit on the home. Here is what I was contemplating: Owner finance the home to a buyer, season the note, sell the MH note and cash out, pay off the balance on my loan. How would I go about doing something like this? How would I determine the selling price of the owner financed note? Where do I find buyers for the note? I would appreciate any and all suggestions.
Posted by Dave Swett on July 12, 2001 at 10:03:36:
When you owe “quite a bit”, that might make an owner finance impossible. What are some numbers on your MH?
Purchase price, existing loan (terms-pmts, due date of note, int rate, desired selling price.
With this kind of info, maybe someone in the chat room may be able to give you some feedback.
Re: Need info on selling MH note - Posted by Tim (Atlanta)
Posted by Tim (Atlanta) on July 12, 2001 at 12:16:23:
Charles,
I think you already know this, but you are in a world of hurt here. The depreciation on new homes, along with long term notes that have little or no amortization in the first few years leaves you with a mobile home that is worth much less than is currently owed on it.
The problem I see with your solution of creating an owner financed note, seasoning it and then selling it is that you can’t create a note against the property when you already have a lien on it from the original lender.
A few possible solutions come to mind :
Sell the home on an land-contract. This is similar to your owner financed note idea, but here you are creating a long term sales agreement, not a new note. Your name would stay on the original note, and you would still be responsible for the payment.
2.You could also consider a lease-option agreement with your new buyer. Just make sure the monthly rent covers the mortgage payment and that the park allows rentals. If the park doesn’t allow rentals, you will need to go with the land-contract idea in #1 above. If your tenant/buyer exercises their option, they get new financing and you pay off the note.
Let your new buyer assume the note. Most mobile home loans can be assumed. Your buyer will have to be approved by the holder of the note. In some cases you will still be liable for the note. Try to get a release of liability if at all possible from the original lender.
Yeah, I pretty much know that I am screwed with the depreciation/amortization problem.
I have been trying what you suggested in option #3. Acctually, that is why we refinanced, to get into and assumable loan. The problem is that everyone we talk to about purchasing the house claim to have bad credit and are scared off by having to deal with a mortgage company. We have had a few people try, though, but were rejected.
Can you give a little more detail on option #1?
Why wouldn’t I be able to do owner finance? Wouldn’t I just become a second lein holder on the title?
Re: Need info on selling MH note - Posted by Tim (Atlanta)
Posted by Tim (Atlanta) on July 12, 2001 at 14:00:23:
Maybe I have missed something here. How much are you selling the home for? Is it more than the mortgage balance? I just assumed that the home would sell for much less than the first note balance. If that is true, how can you be a second lien holder? What would the amount of the second be? If you sold the home for more than the first note balance, wouldn’t you need approval from the first note holder to let the buyer assume the note?
On option #1, it is a sort of a wrap type transaction. You keep the original note on the home, and you “owner finance” the home providing the financing yourself. The deal is between you and the buyer. You would presumably sell the home for more than 39k, and finance it to your buyer for a monthly payment that would be greater than your payment on the first. This is most common in single family homes, but may be applied to mobile homes as well. It is called a land contract or an installment sale. It is similar in practice to a lease/option, but it avoids the headache of renting in a park that doesn’t allow rentals, and the buyer has the mindset of an owner, not a renter.
What I hope for (maybe a pipe dream) is to break even or even make a little cash in the deal. What if I sell the home for the same amount as the current mortgage balance? Would that put me in a position to be able to do a true owner finance and become a second lien holder and create a sellable piece of paper? What are the constraints or limitations of becoming a second lien holder in a situation like this? I may be barking up the wrong tree here, that is why I am trying to find out if my idea has even a remote chance of working.
I am actually in a land contract type of deal right now. I have someone living in the home and making monthly payments to me to cover the lot rent and the house payment. I was just hoping to find a way to cash out and unload the home without having to fork out a lot of my own cash.