Posted by Scott (ATL) on June 01, 2001 at 12:07:53:
Scott,
In the case I mention I’m not trying to take over the property. I just wasn’t aware that notes even had assumable clauses in them anymore regardless of qualifying or non-qualifying.
I actually have a few offers outstanding where I will be using a trust mechanism to acquire the property. I am actually using the PACTrust and it does have some provisions in the trust agreement to keep the DOS from being triggered (Again, highly unlikely unless interest rates skyrocket and lenders begin setting up task forces to look into their notes that have been put into trust that might possibly be violating the DOS–they’d have to be pretty desperate for cash if this ever happened )
Thanks for the input! I totally agree that finding the motivated seller is the first thing (And the hardest!) and a technique will exist to make the deal happen.
Newly written FHA Mortgages that are assumable? - Posted by Scott (ATL)
Posted by Scott (ATL) on June 01, 2001 at 09:46:48:
I have a friend that told me her builder (Pulte) pointed out that the FHA loan she received is assumable. Based on all the investors I have heard the last assumable FHA note was back in the mid/late 80s. Have any of you heard about FHA writing new assumable notes?
I can try to take a look at her paperwork and look for a DOS or lack there of but I thought I would check to see if you guys have heard of this.
Nothing new here. ALL FHA loans are assumable. The only question is whether they are QUALIFYING or NON-QUALIFYING. All loans originated after November 15, 1989 are QUALIFYING.
Qualifying means that you must qualify for the loan based on income and credit.
By the way, my belief is that investors can’t formally assume an FHA loan unless the loan is 75% LTV as established by an appraisal. But check the latter out since there has been some dispute over this.
I think Bill Bronchick mentioned in a post at one time that HUD or some other government entity backing home loans would NOT ALLOW the investor to trigger the ‘due on sale’ clause in the event of discovering ownership transfer for a loan that was CURRENT.
Re: Newly written FHA Mortgages - Posted by Scott (ATL)
Posted by Scott (ATL) on June 01, 2001 at 10:16:42:
Oh! Boy it is easy to get terms confused. I guess I always heard “no longer assumable” not “no longer NON-QUALIFYING assumable”.
But like you say, from an investment standpoint it may not be that advantageous. As an investor we would need to personally secure the assumed note and the price would have to be 75% LTV and our credit would have to be great.
Re: Newly written FHA Mortgages - Posted by B.L.Renfrow
Posted by B.L.Renfrow on June 01, 2001 at 22:28:25:
Scott,
I think you are referring to a comment Bronchick made that the foreclosing lender would have to get permission from HUD to foreclose based on a DOS violation – and he was not aware of HUD ever having authorized a lender to foreclose based solely on title transfer when the loan was current.
Don’t let the “qualifying” part of the assumption discourage you. The way I look at these situations is that ALL loans can be ‘assumed’ by investors like us regardless of the LTV. That is to say, they can be placed in a trust and taken over ‘subject to’. This can violate the ‘due on sale’ clause of the note (unless, as I understand it, you use a PACTrust), but the lender has very little chance of finding out that the beneficial interest in the trust has been transferred (to you).
The key, as always, is to find the motivated sellers and, if the numbers are suitable to you, FIND a way to make the deal happen and work for you.
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