Re: Speaking of DOS clauses - Posted by Bill H
Posted by Bill H on March 04, 2009 at 18:29:37:
What would you do if they just stopped paying at all?
In essence without the DOS all you have is basically an unsecured note.
Yes, it is secured by a DOT but with no teeth in it.
There are paragraphs for insurance, taxes, etc…but what good are they for enforcing eviction for non payment…if they are keeping the place nice and clean, etc.
Lack of a DOS does not sound too good to me.
Re: Speaking of DOS clauses - Posted by Kristine-CA
Posted by Kristine-CA on March 04, 2009 at 20:01:18:
Hi there. Thank you for your reply. I really value the experience of
those of you who lived through that 80s RE stuff. Seems especially
relevant to me these days!
OK. I get your point that eliminating DOS doesn’t eliminate liability.
Except, that in CA, a non-judicial state, the lender would have to
forego the non-judicial route (trustee’s sale) and go the judicial route
in order to keep a trustor on the hook. Not too likely on your average
SFH deal, I think.
Borrowing via seller financing with no DOS clause: monetizable feature.
That really is the goal. Seller financing is what sellers are coming to
grips with in my market. If they have any equity at all and their
property isn’t 100% FHA ready, seller financing is the only thing that is
going to get the deal done. They’ve been here before and are no
strangers to seller carrybacks. 2003-2007 was an aberation, to be
sure. Kristine
Re: Speaking of DOS clauses - Posted by JT-IN
Posted by JT-IN on March 04, 2009 at 19:45:30:
Not exactly Bill… What teeth does the DOS clause give a secured lender anyway…? Only protects against two things… in theory. 1) From being stuck with a low yielding note when rates have risen… and 2) from waking up one morning with an unknown commodity of a borrower.
The DOS clause provides no security whatsoever… except as mentioned above.
Lets face it, if it is investment property and you are continuing to receive the monthly spiff, then great. If not then you are po’d and forelosure is the option. But if as you say, they are keeping the place nice and clean, then beat me with a feather… what do I care… 2 ff’s in the name, just so you get the check spelled close to acurate so the bank will negotiate the funds, then I am happy.
The real risk comes in if and when the property is transferred to someone of questionable credit and maybe with CJ’s, Bk’s, etc. It can sure screw up the title to the property to the point that foreclosure is the only option. That is the big risk, that you go to bed with a 10… or 9.5 even, and wake up with a 2… as the ole country song so eloquently srates… It is one thing when we are talking about vanity and looks, but quite another when we are talking about FICO score and pending judgments at the local courthouse. More like a -10 when that happens.
Re: Speaking of DOS clauses - Posted by Kristine-CA
Posted by Kristine-CA on March 04, 2009 at 19:13:41:
Hi Bill. I think I didn’t explain my idea well. Wouldn’t be the first time!
I’m talking about eliminating the DOS clause when I’m the
buyer/borrower from a seller who carries back the note. If I know I
plan to wrap the note, then I’d like something that prevents DOS.
When I’m the seller carrying the note…well, obviously I want terms
that include DOS. Does that make sense? Kristine
Re: Speaking of DOS clauses - Posted by Bill H
Posted by Bill H on March 04, 2009 at 23:51:53:
Exactly the teeth I was referring to. Gosh, I wish I had you for a speech writer and grammar coach. You do it so well.
No pun intended. I like your detailed explanations.
My problem is that I think that eveyone should understand the little inuendoes that you explain.
Good Luck,
Bill H
PS: We had about two inches of snow here in the deep south on Sunday morning and the local were walking aroung dressed like eskimoes.
Nothing like the place in Montana. Friends said it was a mere 4 degrees above zero on Sunday and they expected another storm yesterday and possibly another 12 inches of snow. I ain’t going back up there in that kind of weather!