real estate finance - full book (500 pgs)

Fha requires a substitution of liability and terms

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Unformatted text preview: -payment, and it may provide the seller with a good investment opportunity for the sale proceeds. This extension of credit with assumptions of existing loans was the salvation of the real estate industry in the early 1980s when all hard money interest rates, including those for FHA and DVA loans, went to record highs for the 20th century. In several types of transactions, the seller cooperates by lending directly, offering an assumable loan, or remaining involved through a wrap–around trust deed or a land contract. The seller acts as a lender to hold or “carry back” first, second, and/or third mortgage notes from the buyer. This is an alternative to borrowing from Institutional lenders. Seller can receive additional monthly income and might be eligible for capital gains tax deferment. Buyer does not need to qualify for an Institutional loan or pay loan origination fees and points. The terms and conditions of the mortgage are subject to negotiation between the seller and buyer, subject to federally mandated imputed interest rules. Credit extended by a seller is a type of purchase money mortgage. SECURITY FOR THE LENDER Security is provided by the owner's equity in the property, even though the loan secured by the property is in a secondary position. REQUEST FOR NOTICE OF DEFAULT A junior lienholder or other parties with interests in the property may record a “request for notice of default,” in which case the county recorder must notify the beneficiary of a second trust deed if a default is recorded by the first trust deed lienholder. The notice 9-36 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 9: FIXED RATE MORTGAGE AND ALTERNATIVE MORTGAGE INSTRUMENTS informs the junior holder so that the junior holder can reinstate the first trust deed to prevent foreclosure and thus protect the junior lienholders position. SPLIT–RATE MORTGAGE A new mortgage instrument, the split–rate mortgage...
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