Search:

News by Subject
Complete list of specialty news sections.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Mortgage Industry News
Subscription-based news for people who work in real estate finance.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories for your web site or for your RSS reader.

News Archives
Archive of news entries.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Graphs
Directory of lenders, branch operators and mortgage service providers.
home advertise email RSS about us
 
HOT Topics Rates Glossary LO License Search
Consumer Mortgage News
Free mortgage news for current and prospective borrowers from a leading online mortgage industry news publication.



Seller Financing on Homes Can Be Risky

"Wraparound" mortgages present risks to buyers

June 18, 2015

By GARY M. SINGER Sun Sentinel - Tribune News Service


Question: We rent a house, and the owner wants to sell it to us. Our credit is not so great, and the seller can't afford to pay off the existing mortgage.

So he offered to give us a new mortgage and then use the payments we are making to him to pay off his existing loan. I've never heard of something like this. Is it legal?

Stu


Answer: Yes, it is legal, but it generally is not a good idea.

This is called a wraparound mortgage and is most commonly used by sophisticated real estate investors in certain scenarios.

Most mortgages contain a "due on sale clause," which means that when a property is sold to a third party, the existing mortgage needs to be paid in full. If it can't be paid, the lender will foreclose. Even if this doesn't happen, another problem could arise if the seller does not pay his existing mortgage with the money you pay him.

It's possible that the seller's lender will allow you to take over the mortgage, so you may want to see if that's an option. You also should check with local banks and credit unions. They often will look beyond a borrower's credit score and consider the person's overall financial situation.

If nothing can be worked out, it may be better to keep renting and improving your credit score so that you can buy a home with a traditional mortgage.


About the Writer
Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He is the chairperson of the Real Estate Section of the Broward County Bar Association and is an adjunct professor for the Nova Southeastern University Paralegal Studies program.

next story

back to home page


To see more of Sun Sentinel or to subscribe to the newspaper, go to www.sun-sentinel.com

Copyright (c) 2015, Sun Sentinel

Distributed by Tribune News Service.


This story was distributed by TNS - Tribune News Service
 
Refinance News
News about refinance programs, pricing and production.
H A R P 2.0 News
News stories about the H o m e Affordable Refinance Program including expanded program guidelines.





Copyright © 2016 MortgageDaily.com
MortgageDaily.com Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

pricing engine directory

wholesale lender directory

More Mortgage News Resources (MortgageDaily.com full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

free mortgage news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter

MBS

mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

refinance news

reverse mortgage news

sales blog

secondary marketing

servicing news

subprime news

wholesale lenders

wireless mortgage news