Need Legal Advice on "Deed On/ Deed off" - Posted by charles (delaware)

Posted by Irwin on November 05, 1998 at 19:38:35:

If his bank is “okay” with the procedure, why can’t they just make him a straight 80% LTV loan. Why the “magic trick” approach with the buyer holding title for 1 day and the doing a re-fi (if I understand what you’re talking about)?
If things do go “wrong” you might run into more problems than you anticipate, and the deed back might not remedy all of them.
As you can see, I’m not a big fan of this kind of finagling.

Need Legal Advice on “Deed On/ Deed off” - Posted by charles (delaware)

Posted by charles (delaware) on November 05, 1998 at 15:55:41:

I am the seller. Buyer wants to use “deed on/ deed off” to get 80% refinance of appraisal which is higher than sales price. His bank is OK with it. We meet with title company next Thurs. to set up the deed, then we meet Fri for cash settlement with his bank.

I will have $2500 earnest money deposit before Thurs and balance of $69,000 sales price on Fri.

I understand that I will hold deed papers removing him from the deed should anything go wrong.

Please comment.

Not likely - Posted by John Behle

Posted by John Behle on November 11, 1998 at 19:01:34:

If the loan officer is telling you to jump through certain deceptive hoops to get a loan through, that DOES NOT mean the bank, mortgage company or lender approves. I’ve seen cases where the loan officer goes free and the borrowers go to jail. I’m not being fear based here, only pointing out that the loan officer DOES NOT speak for the lender.

What prevails is the documents you sign. If they disagree with what the loan officer is telling you, walk away. Too often investors think they are safe doing what the loan officer suggests.

Loan officers for mortgage companies are usually paid on commission. The mortgage company usually sells the loan and sometimes have little regard for the lender that is making the loan. When it comes down to it, relying on the verbal representations or directions of the loan officer may be of little help if you have signed documents to the contrary. I have also seen where some sneaky loan officers have gotten borrowers to sign documents without explaining them and even forging the borrower’s signature.

Just a word of caution. I just don’t believe you have to mis-represent things to succeed in this industry. I’m not saying that’s what’s happening in your case, I couldn’t tell that without more details - but you should be aware of the dynamics of the situation in case something shady is in the works. I’ve seen as many loan officers practice loan fraud as borrowers. In fact most of the time it is the loan officer encouraging it.

Re: Need Legal Advice on - Posted by Bill Gatten

Posted by Bill Gatten on November 08, 1998 at 18:03:15:

… and, not only that (re. Irwin’s post), but the courts frown heavily on pre-executed forfeitures. Back in the old Equity Share Days, I ran into a lot of clients in my consulting business who thought they were protected with pre-signed deeds and deeds-in-lieu, and found they weren’t. It seems the courts always throw them out in favor of the expensive lawyer-driven stuff, if the document is questioned or challenged (as to its legitimacy) by the other party.

Move with “cuidado” my friend (a little Spanish lingo there… means “CYA”).