New Wrap Loan in Texas question

General Real Estate Investing
1

I am selling a piece of property, with owner financing, in Texas that has an existing mortgage. The way I see it, I have 3 different choices.

  1. Buyer assumes first mortgage “subject to” and I carry a second. I believe this would be the hardest for me to foreclose on if the buyer defaults, so I am not comfortable with this.

  2. Wrap loan. I used these many years ago in California, but I do not hear much about them now. Has there been some new legislation that inhibits them ? Would this be a good way to go ?

  3. Contract for deed. I know there have been some issues with them in Texas, so that is probably not a good option. But maybe if it is done right, it would be the best.

Any advice would be greatly appreciated. Ted are you out there ? LOL

2

All of your choices really are a wrap.

To allow him to take subject to the existing loan and you carry a second is still publicly exposing that you sold. Whether violating the DOS bothers you or not exposes you to the lender calling it due. There is no problem foreclosing. You just have to make your demand for 20 days then file 21 days before a first Tusday.

To create an All Inclusive Trust Deed has the same problems with the DOS. Likewise the AITD is and second and has to be foreclosed. Nothing new in state that prevent them.

Now contract for deed in Texas is another animal for the seller. Too many pitfalls with penalties. An example of the goverment screwing up something they were trying to fix.

I prefer Gatten’s EHT giving them all the privledges of ownership without them being able to mess up the title with bankruptcy, divorce or other liens. Other than understanding it you can pick your poison.

3

Bud,

Wow, thanks for the information.

Parden my ignorance, but what is Gatten’s EHT ? I have been off the board for quite some time, so sorry if it is described in a forum somewhere.