Desperate sellers consider high-risk financing option

DEAR BOB: We are having great difficulty selling our ruralhouse. It has been listed for sale about eight months with only one”Mickey mouse” offer. The buyer will obtain a 70 percent firstmortgage, pay us a 5 percent down payment, and give us a 25 percent secondmortgage. However, this is to be an unrecorded “silent second” mortgage.The Realtor says the idea is to make the mortgage company think the buyer ispaying 30 percent cash down payment. He says it is done all the time,especially with “difficult” properties like ours. What is your adviceabout a silent second mortgage for us? –Vickie V.

DEAR VICKIE: An unrecorded silent second mortgage is a fraudon the mortgage lender. I know it goes on, but lenders rarely prosecute theborrower or seller.

Purchase Bob Bruss reports online.

However, an unrecorded silent second mortgage is dangerousfor you. If you don’t record it, and if the borrower doesn’t make the paymentsto you, you can’t foreclose to get the property back if your second mortgagehasn’t been recorded.

At the very least, you should record your silent secondmortgage after a week or so. But you should be aware that before it getsrecorded, your buyer might incur liens, which would have priority over yourlater-recorded second mortgage.

For example, your buyer might have a prior judgment lien,income tax lien, child support lien, or other possible liens, which could attachto the property. If you decide to proceed, please be aware of your high riskand do everything possible to minimize it. For details, please consult a localreal estate attorney.

CAN A REVERSE MORTGAGE BE REFINANCED?

DEAR BOB: We obtained a senior citizen reverse mortgage in2004. Recently, we received a letter from our mortgage company outlining why weshould refinance to obtain greater reverse mortgage benefits. Is this possible?–Jopie C.

DEAR JOPIE: Yes. Reverse mortgages can be refinanced.Perhaps your home has greatly appreciated in market value. The reverse mortgagelending limits have increased substantially in the last two years, makingtoday’s reverse mortgages more attractive than a few years ago.

If you have a need for increased funds, I suggest youinquire about the advantages of refinancing your reverse mortgage.

IF YOU HAVE DOUBTS, CHECK YOUR TITLE AT RECORDER’S OFFICE

DEAR BOB: I bought my house in 1960 and paid it off in 1980.I have a living trust in my name. My problem is for the last 18 months I havebeen receiving mail from Realtors addressed to a person I don’t know, asking ifI want to sell my home. I phoned one Realtor to ask where he got her name. Hesaid he got the name on the Internet. I called the county assessor and he told menot to worry as everything is in the name of my living trust. However, I seemto have misplaced my title insurance papers. Any advice? –Phillip V.

DEAR PHILLIP: If you are receiving your property tax billsin your name, you probably have nothing to be concerned about. However, whenyou are in the area of the county recorder of deeds office, stop in todouble-check how the title to your home is held. Mistakes do happen. Or therecould be a forgery in your chain of title.

I don’t mean to alarm you, but checking won’t do any harm.If you find there is a title problem, contact your owner’s title insurancepolicy insurer. Your title policy is valid as long as you or your heirs ownyour property.

The new Robert Bruss special report,”Pros and Cons ofToday’s Five Best Real Estate Profit Opportunities,” is now available for$5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this columnare welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2006 Inman News

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