as i understand it, some lenders are putting addendums or verbage in the short payoffs that prevent investors from doing an A-B B-C closing. i’ve read about people suggesting to purchase under an llc and then selling the llc, however, i’m not sure they were actually doing this.
what work arounds do you guys use so you can still do the A-B B-C closings?
What the lender wants creates a deed restriction. Hard for a lender to create a deed restriction on a property they don’t own I would think… My title company hasn’t had issue with reselling all even with that request.
BOA has become a promulgator of such. Apparently, they believe that because they COULD have made more money on the SS, had THEY found the retail buyer, they don’t want anyone else to do so without at least incurring some additional expense. All they are doing is slowing down the inevitable and making another lender, probably a private lender, some extra income. That paragraph is spawning a whole new industry, as in the “Fix-a-Flip” Joint venture equity partners, and others.
Michael has shared that this “condition”, put into the SS payoff letter, which constrains the Borrower/Seller from allowing the property to be resold within 30 days, may in fact be an illegal deed restriction. It’s a very good point If anyone hears of this being put to the test, in a legal case, I hope they post that info here.
But, if the gap between what the investor would make is small (under 10-20K), what attorney, other than a staff attorney for BoA, would be a Plaintiff’s Attorney to sue the BORROWER, who is most likely dead broke? This makes no sense.
Suing a broke homeowner for breach of contract would force them into bankruptcy, so BoA’s proceeds on the suit would be nil, meaning all they are doing is punishing CONSUMERS even more, for having taken a loan out with them in the first place. Since the CONSUMER was their CUSTOMER, and some of these loans were put in place through some kind of fraudulent activity on the part of the originators of the loan (just had a SS close where this was the case), this kind of negative press would be BAD for their business. They don’t seem to care.
In other words, investors and any other consumers who hear of this constraint on their customer’s ability to get their house sold, in a timely manner to avoid foreclosure, are going to think of BoA as a big bully, to be avoided when you’re seeking a mortgage.
[/begin rant] Yet Ken Lewis, past CEO, is retiring with a $125 million dollar retirement bonus from his “service” to BoA? No wonder the Feds are working to create a consumer protection agency to keep a better eye on unscrupulous business practices of lenders, which truly raid the value of the stock of SMALL shareholders in deference to the interests of the few, the proud, the insiders controlling most of the wealth of these corporations, then lining their own pockets on the way out. [/end rant]
Anyhow, I’d say that 30-day clause will soon backfire on them. I hope it translates into the loss of millions, no billions, in profits, because of lost customer goodwill.
A work around? Just get a loan for 31 days and then close the deal.
do you know for certain your title company has an issue… Mine doesn’t and they are the nations largest… if yours does use two title companies… The key is that they are not writing on the deed the restriction… Its on the approval letter… Which you’re not a party to… Its an approval for the seller who doesn’t have control of your actions…
I am simply waiting on my approval to close in duluth GA. my atty says in his view it not about either, but simply that the lender is buying to get release the deeds. due to all the short sales they are doing because they have enough employees to cover all the wk that needs to be done.
I know my loss mit from citimortgage says he’s working on 150 files. go figure, many of us can’t even work 5 deals at once…so just remember this & let folks knows in the beginning the journy may be long than usual sometimes.
this was going on what another investor mentioned. as per his feedback he mentioned that title companies won’t cover any liability after the closing. i’m still gathering various information on this topic, including a webinar tonight. hopefully there will be a few options available to investors.
" … doesn’t have prior notice from ss lender nor agree." …
Help me with this statement, Michael. We’ve visited on the phone about this before. I’d be very interested to hear if their are any test cases only going in the court systems about this. Perhaps this is a condition regarding whether the Lender will record the release of lien as a full settlement, if the borrower does not follow every condition of the payoff agreement? Yet, it does seem entirely beyond the control of the borrower what HIS Buyer does with the property.
How can the Borrower/Seller control what the Buyer does with the property, especially when the Buyer has NOT accepted these terms? Since this condition for short sale payoff adds costs to the transaction, for the BUYER, it seems highly implausible that the Buyer, i.e. the investor or retail buyer, is interested at all in absorbing these costs, foisted upon the Buyer at the last minute?
I’m really at a loss for why BofA would have this condition #10 in their payoffs yet have been willing to allow Ken Lewis to receive a $140 million severance package upon his retirement. Seems to me that BofA is sticking it to two of their more valuable assets – their borrowers AND their small investor stock holders.
Obama is right – these CEO’s and the top management at many of these companies have been sticking it to us for far too long, and this condition #10 is a classic example of large, multi-national companies run amuck, because their actions have been left unchecked and under-regulated. My $.02 worth.