Title insurance binder

Financing, Hard Money Lenders, Private Money
1

I am getting close to closing this deal, lawyers still have not returned my cal.
A friend that works in the settlement agency sent me a document, title insurance binder. I wanted to the buyer to purchase lenders title insurance to protect my investment as part of the closing cost, but in order for the LLC to be covered according to the document, the mortgage must be insured. ( Mortgage Insurance premium ) Which I did not include nor was not planning to get one.
What do I do???
Help!!!
Yokee

2

Restate your question, because it doesn’t make enough sense yet to answer.

3

I gave the settlement agent instruction that I am requiring for the buyer to purchase a title insurance for the lender, Yokee LLC.
So she ( settlement agent ) sent me a title binder letter to read through.
Reading it, says, I quote “You are to be a lender secured by an insured mortgage, as defined in Alta Loan policy (6-17-06 ), or a purchaser of an interest in land”
“Lender secured by an insured mortgage” Does this means I need to purchase a mortgage insurance for the purchase money? Does this also means I would need to charge the buyer a monthly mortgage insurance for her loan?
I am not collecting escrow because it is interest only loan; she pays for her taxes and Insurance.
Does my question make sense now?

4

First off, the title company won’t close on this deal without first guaranteeing the deed is marketable at the time of delivery. Or without carving out whatever they find that they won’t insure against, and you make up your mind what you’ll accept, or not.

Short of that, wait for your attorney to call you back, because you are attempting to do something so unusual for a private lender, that I’m not sure hell would freeze over before you got your buyer to pay pmi.

Frankly, if you can’t risk the loss, you have no business lending this money. Know what I mean?

5

I know…but I promised I will lend her the money to buy the house. I only want to do it right and safe for my sake.
Thanks for your advice…any other comments to help me do it right?
Yokee

6

Yeah, well, the worst-case if you renege, is that you’re just not that dependable a source of risk-free money, after all. Poor you.

You’d be better off loaning this deadbeat wannabee 30% for a down payment, and let her qualify for a conventional loan. Why not? She won’t have to pay pmi. And she could have ratty credit. However with that kind of a down payment, she could still get decent financing. And you’ll only lose 30% of the deal, instead of risking 100% of it.

All of the sudden I hate this whole idea. Again, if you can’t lose the money, you have no business lending it.

7

Hi,

I think Yokee indicated that this buyer has 20% down so loaning 10% as additional down payment recorded as a 2nd trust deed amortized over 5 or ten years at 8% is much safer than loaning 100% of a new mortgage.

I have friends I loan money to on occasion and some without collateral but I either trust them or I don’t and I certainly don’t need to ask foreclosure / default questions because if I have that kind of doubt I should not be loaning the money in the first place!

Now I can afford to lose money but I am smart enough not to loan it if I think I am going to lose it!

                   GR
8

Appraisal of the property just came in at $227. I cant let this one go for someone else to grab the deal.

With a $45k equity already before I can even blink, no way I am going to let it go.

I had a similar situation before and I let the purchase go because of shortage of fund- No way I’ll do that again.

I personally will not profit from the 45k equity, except of course getting a little bit more interest from my money-I am charging her 6% and 1 year balloon payment -

I met with s real estate lawyer today and she have given me good advice and all terms of the loan are already established and everything is covered-legal.

Thanks for all the advice and Ideas. When this purchase is closed and then she refinanced and I get 100% of my funds back. I’ll flip houses. I think that is more profitable for me than funding someones mortgage and giving away large equity to the buyer. Hehehe. I am still in the learning process but I am getting good lessons so far.

Thanks everyone.