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Mortgage Loans Due in One Year

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Thomas N. Morgan

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Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Florida
I got an request to appraise a home for a bank that makes mortgage loans that are due in ONE YEAR. Ever dealt with a lender that makes that kind of loan? What purpose does a loan like that serve?

I remember doing work for a big lender that made "bridge loans" for horse farm purchases, where getting permanent financing through a farm lender could take a long time.

This one sounds like the bank makes loans for just a long enough period for the borrower to re-sell, or flip. Now, the bank is thinking about foreclosing. Reading between the lines of the deeds and quit-claim deeds back and forth, makes it look like an intended FLIP that FLOPPED!

COMMENTS?
 
Joined
Oct 22, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
Sounds like some sort of bridge loan...what does it really matter tho?

Just appraise the property and let the chips fall where they may.

I have seen some "rehab/flipper" lenders that specialize in this. They advance the purchase price PLUS the estimated repair costs, and you don't even have to make interest payments. Flip for no cash out of pocket. Short terms and VERY high interest rates....they probably made a mint over the past few years with SoCal and Florida flippers going to the well and the property being worth 30-40% more in a few months when the flipper sold. Win-win for both sides.

Bet thats all changed now....

todd
 

Oregon Doug

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Jan 15, 2002
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General Public
State
Oregon
I've never heard of a 1 year mortgage - heck, I've seen car loans that go out 4, 5 and even 6 years.

If it not a bridge loan, is it a 1 year call of a property loan on which the borrower has missed a couple of payments or even entered the foreclosure process?

Oregon Doug
 

Thomas N. Morgan

Thread Starter
Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Florida
William,

Thanks for your reply. I am appraising the house. However, if you are appraising for a lender, it's not a bad idea to have an understanding of the business they are in. It has something to do with the contents of the report and the scope of work.
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
Thomas This one sounds like the bank makes loans for just a long enough period for the borrower to re-sell said:
We use to call that type of deal a LOAN TO OWN.

There is usually a clause in the loan agreement that offers to refinance at a renegotiated rate and terms. A bridge or construction loan.
 
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