Contract for deed

[dblbogey]

I have a request for a 1004 for a refinance. The borrower is buying the home under a land contract (or contract for deed). He is looking to refinance to get additional money to "fix up the place" and pay off the original mortgage.

I have verified this through the bank, borrower, and seller. I even know what interest rate he is currently paying.

In the 1004 who do I put as the owner? The deed is in the former seller's name and will stay that way until he receives all of his money.

How have any of you handled this in the past?

 

[PropertyEconomics]

Isnt this essentially a PURCHASE ... in a land contract the buyer doesnt go into deed until the purchase is complete ...

Report the owner of record, report the contract as having been signed (yes or no) in last 36 months, and discuss the existing contract for purchase (land contract / contract for deed).

 

[Joyce Potts]

How does one refinance a property where one doesn't hold title?

Let the lender know and congrats, you've talked yourself right out of another fee!!

 

[Richard Carlsen]

The land contract buyer is the owner of the property. By terms of the land contract he has the full rights of ownership of the property. The cash out of a land contract is simply the fulfilling of the terms of the contract.

Most land contracts permit the HO (contract buyer) to mortgage his equity in the property while keeping the contract in effect. Problem is that nowadays it is hard to find anybody who will loan since the mortgage has to be a second. The deed holder (seller) can also mortgage his interest in the contract (balance owing).

For the form I would show the borrower as the the buyer (HO) and put whoever is shown on the county records (taxpayer). Sometimes the buyer pays his own taxes directly and is shown as the owner. Other times the deed holder will be shown as the owner. It just depends on the county.

I would make a statement in the report that the HO has purchased the property as the a land contract buyer on such and such a date. The terms of a land contract are normally fee simple (inheritable) with the buyer having full rights of ownership and possession.

 

[dblbogey]

How does one refinance a property where one doesn't hold title?

Let the lender know and congrats, you've talked yourself right out of another fee!!

Not really the lender already knows and frankly the "deal" isn't going to work anyway. I have already been paid and simply need to complete a report.

I will certainly report that the deed is in someone elses name but for future assignments I need to better understand how to handle this.

So....for arguments sake... a contract for deed is considered a purchase is it not?

ie: I agree to buy your property for $100k, you will finance it at x% for n number of years. The payment will be paid to you at $500/ month and the deed will be put in my name when you are paid in full.

So who is now the owner, you or I? Naturally the stip that says if I am late you consider all past payments to be RENT is a problem!

 

[dblbogey]

Richard, read your comments after my last post and your answer makes perfect sense. Thanks!!

 

[David S. Roberson]

The Dallas office of Fannie Mae says it's a sale, mainly because that's what it is.

 

[Otis Key]

Not really the lender already knows and frankly the "deal" isn't going to work anyway. I have already been paid and simply need to complete a report.

Let me guess! The "lender" is an MB! Danger Will Rogers! DANGER!

 

[Richard Carlsen]

The Dallas office of Fannie Mae says it's a sale, mainly because that's what it is.

And the Earth is the center of the Universe because the church says it's so.

 

[BenLuby]

Let me guess! The "lender" is an MB! Danger Will Rogers! DANGER!

Errr...that's Will Robinson. Who's Will Rogers?