I have a home in Texas for sale that is listed with a RE agent. I asked her to put “owner financing available” on the description as I would like to do a all-inclusive trust deed (i.e., wrap-around mortgage) to cover people who may not be able to qualify for traditional financing. She said she thought it was illegal to do now (in Texas), but would check up on it. I told her it would be news to me. She then comes back and says she talked with a title co. rep, who told her that the only “legal” way to do owner financing would be if you owned the home outright as the lender could call the loan due otherwise.
Short of finding another agent, how would people who have done owner financing in Texas before handle this?
Not sure about specifics in your state, but I think if you have some equity in the house, I don’t see any reason you could carry a second, this way a potential buyer would not have to qualify for the full amount of the purchase price…and you could get a nice rate on return
Actually, I am offering both full and partial owner financing. If the buyer can’t get traditional financing at all, I’ll do an AITD/wrap. If they can qualify for 70-90%, I’ll carry back a 2nd.
I talked with my agent moments ago, and was able to show her that AITD’s were not evil. Basically, the lender can call the loan due, but if it’s performing the chances are rare. Rarer still is that they remain in 1st position, so the chances are even slimmer.
I gotcha, i just realized your not a newbie :o, I probably told you something you have known for a long time…oh-well I tried…
I agree that the bank wouldn’t want to call it due if it’s performing. If they for some strange reason did, would it be called due on you, or the new owner?
Not too familiar with AITD’s. Does title transfer and a deed get recorded?
I am in Texas, but I am not an attorney (obligatory disclaimer). I do not think wraps are addressed in the recent legislation passed last Sept… If the DT is held in escrow and buyer signs DOS and any other relevant disclosures.
Ronnie -
I spoke with a local RE attorney last week, who said they do handle these types of transactions (i.e., they are NOT illegal). He basically said once I have a buyer and we hammer out the details to call him and he’ll set up all the paperwork and close the deal. I won’t know all the details, though, until I actually close with him. It sounded like he tries to protect his and his client’s position, because my buyer and I must meet with him TWICE to go over the paperwork and sign disclosures, etc. I was expecting some outrageous fee, but he said it will only cost me $1,500 to do everything.
Edit: BTW, I have a to-do to call two other RE attorney’s this week to see what they have to say. I was a bit disappointed when this attorney said he doesn’t handle Sub2 closings, which was another thing I wanted to find.