Land Trust question
I have a question? Would it be necessary to place the deed that I acquire buying a preforeclosure into a land trust to avoid the lenders due on sale clause? And if so, how much does it cost to do a land trust? Also, if I didn’t use a land trust then would I just hold the deed and not record it until I have found a buyer for the property? Thanks for your response.
Posted by Dwaine
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Also, in this type of transaction does the buyer have to financially qualify with anyone as part of escrow with regard to buying subject to an existing loan?
Answered by Anonymous
Fri Jan 7th 2011 at 3:00pm
The buyer would not have to qualify since you are not formally assuming the loan or getting a new loan. The risk to the buyer is that if the lender decides to accelerate the loan which would make the entire amount due and payable and the buyer did not have the ability to pay or qualify for a new loan then the lender could foreclose on the property. The risk to the seller is that even though they are selling the house and transferring the title the loan is still in their name. If the buyer fails to make the payments that will negatively affect the sellers credit since the loan is still in their name.
This is a risky transaction on the part of both the seller and the buyer. Michelle
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I too am wondering on this tactic. What companies offer this ? Websites or referrals please!
Answered by Francis
Mon Apr 23rd 2012 at 10:39pm
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Can we stop the trustee sale we a record a Land Trust, couple days before the trustee sale California
Answered by Arturo
Tue Jan 24th 2012 at 9:49am
Hi Arturo,
This COULD provide a temporary stay but it will not completely stop a sale. Michelle
Michelle more details would held me, Thanks! Arturo
Hi Arturo,
There are numerous "services" out there that promote transferring title to a land trust, transferring a portion of the ownership interest into a trust that has an active BK, or another angle is to demand that the lender produce the original note. These tactics may work to delay a foreclosure as the lender reviews the documentation (or files an affidavit of lost original note) but it does not work to permanently stop a foreclosure.
Most Deeds of Trust have an acceleration clause that if the property is sold or transferred the entire loan amount becomes immediately due and payable. If you transfer title to a land trust it could accelerate the terms of the loan and prevent you from being able to pay current the past due amounts if you wish to reinstate the loan.
I hope this helps.
Michelle
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Hi Dwaine,
There is never a necessity for a land trust. The idea that you need a land trust to avoid the lenders due on sale clause is more a pitch to sell land trusts, than truth.
You shouldn’t worry too much about recording the deed. With thousands of deeds being recorded daily it is unlikely the lender will find out about your purchase and force the due on sale clause. Even if they do, they still have to foreclose which, depending on the state, will still give you months to sell or refinance.
Some investors send money orders so that the name on the check doesn’t send a red flag - given the number of payments most large lenders process it is highly unlikely anyone is paying that much attention.
There are certainly fans of land trusts among foreclosure investors, though primarily for asset protection in the case of a lawsuit. What degree of protection this ultimately offers seems to us to be an open question. You should of course consult an attorney regarding your specific needs.
Answered by Lance
Tue Apr 15th 2008 at 10:23am
Land Trust are great you should never never ever put the property in your name. If you don't use a Land Trust at least use a LLC
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Hello, I'd like to find out if a lender does not follow proper collection procedures such as filing foreclosure proceeding 45 days after late payment, Can I request judge to dismiss case based on technicality especially that I did and have proof of letter sent to lender's attorney stating I wanted to give the property back (deed in lieu) before they filed the case. Your help would be appreciated.
Answered by Foreclosure Preceeding Question
Wed Feb 11th 2009 at 2:05pm
Lenders aren't required to accept properties deed-in-lieu, and in fact deed-in-lieu presents significant risks to lenders vs. foreclosure. The reason is that foreclosure typically wipes out junior liens, whereas the lender would have to pay those if accepting a deed-in-lieu.
You didnt tell me your state, but in CA, a lender can file for foreclosure 5 minutes after you are in "default". And by default I mean any failure to perform as agreed under the deed of trust... so it could be for as little as missing one payment. In practice most lenders don't start the foreclosure until much later, but I'm not aware of anything that says they can't start it immediately upon default.
Also, my experience is that judges are unlikely to unwind a foreclosure based on a minor technicality, and in fact, CA Civil Code 2924 outlines a number of technicalities that can not be deemed sufficient to unwind a sale otherwise made in good faith.
All that said, I'm not an attorney, and it may be worth your time to have an attorney review the specifics of your loan and the events surrounding the foreclosure based on the laws in your state.
Sorry I didn't have better news for you. Sean
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MY EARLIER QUESTION IS BASED ON THE STATE OF FLORIDA, WHERE LENDERS ARE TO FILE THREE MONTHS. ANY HELP ON THE QUESTION WOULD BE APPRECIATED.
Answered by Foreclosure Preceeding Question
Wed Feb 11th 2009 at 7:21pm
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I would like to know if anyone knows where I can obtain 2000 or so called "Secret Corporate Credit Compliance Checklist" lenders look for when issuing credit to businesses. Most companies promises to give you this info only after you paid thousands. I already know how to setup the whole corporate structure and need this ckecklist to make sure i don't get blacklisted. Thanks.
Answered by Anonymous
Fri Apr 24th 2009 at 6:00am
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Hello, I am trying to find out if this company American Home Finance based in San Ramon California. The founder's name is Ellis Holland. What they are offering is that I record my deed in a land trust and name someone to be the trutee, someone of my choice ie family memeber, friend. Then they assign 10% of the trust to someone they know who is already in federal bankrupcy. This supposedly stops the sale date of a forclosure. They offer to monitor the account and continue to provied someone who is in federal banrupcy for a fee of $300.00 per month. They say it is not a cure just a stall tactic to give the home owner time to get a loan modification, short sale or improve their financial situation. They say the can stall for several months or years if needed. Can you give me insight. I have a sale date of 4/12/2011. I need to do something to postpone my sale date. I am in review for a traditional loan modification and have requested for a sale date postponement. I am waiting for an answer from Wells Fargo investor being USbank. Original broker who I filled loan application was with Country wide.
Answered by Veronica Gonzales
Tue Apr 5th 2011 at 8:51pm
Hi Veronica,
The key here is that it is a potential stalling tactic. Although it may be effective in delaying a trustee sale it is doubtful that this would help you with a short sale or modification. Essentially you are playing games with the title on the property. I am not aware of any lender that would approve a modification or a short sale if you are no longer the owner of record. If your intent is to delay but ultimately end up going to trustee sale then this may be an option for you. Keep in mind that there is a "due on sale" clause in the Deed of Trust that you signed. You may want to review your Deed of Trust for specific verbiage but essentially this clause says that if all or part of the property is sold or transferred without Lenders prior written consent the lender may require immediate payment in full of all sums.
Although I can understand needing more time to get your affairs in order it is also important to note that there are some benefits to closing this chapter and moving on with you life. Living in a perpetual state of limbo in a house that is destined for foreclosure can create a great deal of mental and physical stress. Sometimes it is easier to cut bait and move on and start the recovery process sooner rather than later. Michelle
So, what happened? Did you do it, and if so the results? sunmAN
Veronica,
What did you decide? We are in the same position facing thevsame decision. R. Fields
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Sean or Michele, regarding comment posted by support on 4/15/2008 on land trust question thread, how do you record the deed when you are buying subject to an exisitng lien? Can you get title insurance as part of escrow when the lien with a due on sale clause is not paid off as part of escrow, but instead brought current by the buyer? Thanks.
Answered by Anonymous
Fri Jan 7th 2011 at 11:33am
Hi,
You can purchase a property legally and with title insurance subject to the existing loans. The title company would include verbage in your escrow instructions and there would be a rider to your owners policy since a lender could accelerate the terms of the loan under the due on sale clause. We do not see many "subject to" transactions because most homes have substantial negative equity but they can be done. Michelle
Thanks. So the subject to loan with the due on sale clause is just brought current through escrow proceeds? Anonymous
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I'd like to find out, once a foreclosure process has been initiated by a lender for a property that was quitclaimed into a "Landtrust" (note: loan was in individual name), what happens or how does the trust protect the owner.
More importantly, if the foreclosure process is started under the individual names (even though in landtrust), what recourse does the owner have in terms of getting this to be reversed to the trust as opposed to the individual name. Your help will be appreciated.
Answered by Curious Investor
Thu Jan 29th 2009 at 11:41am
No recourse. Transfers after the fact have no bearing on the lender, those transaction will all be wiped out by the foreclosure.
Foreclosure is actually a pretty cool mechanism in that respect. If lenders had to worry about what happened after they made the loan, they either a)wouldn't lend, or b)require you get their approval for any new loan, title change, etc. you wanted to make. So by simply saying that nothing that comes after the loan will impact the loan (with a couple of exceptions like property taxes), this problem is completely resolved. Lenders can lend without having to worry about the borrowers future decisions, and borrowers have the freedom to take on additional loans, change title, etc. Sean
