Posted by Brian M. Powers(MI) on July 14, 2002 at 24:08:46:
- Is the only way to assure (in an option or lease/option) that your seller is paying on his first mortgage to arrange to pay your monthlies into an escrow?
you can either pay them yourself directly to the bank or set up a third party escrow service. never let the seller make the mortgage payments themselves. i prefer to make them myself to the bank so i know everything is on the up and up, but if the seller won’t allow me to make the payments directly i tell them we can use a third party AT THE SELLERS COST. - Will checks to the 1st mortgage lender from an escrow agent tend to alert a lender to a DOS?
extremely unlikely as most big banks have some sort of process/customer service dept that checks get mailed to. there only job tends to be opening envelopes and depositing checks. irregardless, the third party paying the check won’t alert the bank to anything(w/ rare exceptions) as people hire property managers to do things like make payments all the time. - All but very motivated sellers may balk at signing another doc, such as a Memorandum or Performance Mortgage, right?
it doesn’t necessarily take a desperate seller to sign a performance mortgage. simply tell them that you are putting a lot at stake in the deal and you are transferring the risk from them to you and in exchange you have to ensure that your interests are protected. no seller should have a problem w/ the memo of option as all it does is serve notice that the agreement that they are signing exists. - If you can, a Memorandum is a good thing to get so you can “mark” that title
performance mortgage is preferred as it makes you a leinholder w/ foreclosure rights. but at the very least record the memo to cloud title. - In the same situations (option, L/O and S2) wouldn’t the BEST of all be a Performance Mortgage, better in a few ways than a Memorandum of Agreement?
yes you want the performance in the L/O situation. in a sub2, you own the property so it makes no sense to slap a lein on your own property.
BMP