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Residential & Commercial Real Estate
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"In real estate investing, the due-on-sale clause can be an impediment for a property owner who wishes to sell the property and have the buyer take over an existing loan rather than paying the loan off as part of the sale. Likewise, a due-on-sale clause would interfere with a seller's extension of financing to a buyer by using a wraparound mortgage, also called an "all-inclusive mortgage" or "all-inclusive deed of trust." Either of these arrangements triggers the due-on-sale clause in the seller's existing mortgage and thus the lender may call the loan due. If a property with a due-on-sale clause in the mortgage loan is transferred and the loan is not paid off, the bank could foreclose on the property.'
'Virtually all mortgage loans made in the United States by institiutional lenders in recent years contain a due-on-sale clause. This is in contrast to the wide availability of assumable mortgages in the past. Until 1982, the enforceability of due-on-sale provisions was basically a matter of state, not federal, law. Many States had adopted laws that permitted existing loans to be assumed by buyers whether or not the lender was willing to agree. The logic behind these laws was generally that a lender should only be permitted to call a loan due when the property securing the loan is sold if the lender could demnonstrate that the sale and transfer of the property reduced the lender's security or increased the risk that the loan would go into default.
However, in 1982 Congress passed the by the Garn–St. Germain Depository Institutions Act. Section 341a of the Act (codified in Title 12, U.S. Code, Section 1701j-3) makes the enforceability of due-on-sale provisions a federal issue, and provides that if real estate loan documents contain a due-on-sale provision, that provision is enforceable if the property securing the loan is transferred without the lender's consent. Institutional lenders lobbied Congress heavily to add Section 341a of the Act to federal law and their lobbying efforts were successful.
Lenders are generally not required to include due-on-sale provisions in loans, but it is nearly universal practice for institutional lenders to include them. For loans by private lenders, such as financing extended to buyers by sellers, due-on-sale provisions are not always included. Also, a buyer and seller could negotiate to include due-on-sale clause that allows a one-time loan assumption.
There are certain exceptions to enforceability of due-on-sale clauses. These are generally contained in Title 12, Code of Federal Regulations, Section 551. For example, borrowers may place their homes in their own trust without triggering the due-on-sale clause. "A lender may not exercise its option pursuant to a due-on-sale clause upon a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property." (12 U.S.C. 1701j-3(d)(8)...) Note that a beneficiary means possibly among multiple beneficiaries. Similarly, transfer of the borrower's home to a spouse as part of a divorce or dissolution of marriage generally does not trigger a due-on-sale clause. There are other exemptions in the law as well. Use trusts also facilitates transfers of property to heirs and minors. It may also protect the property of wealthy or risky owners against the possibility of future lawsuits or creditors, because the trust owns the property, not the individuals at risk."
take over payments
rent to own
property securing the loan is transferred without the lender's consent.
'take over payments' MAY BE the same as 'transferred without lender's consent'
Contarct your Real Estate Attorny.
Very Thin Ice here.
Is that really something you want to do??
You are walking on very very thin ice here.
Now I do admit I am not an attorney, and You really should talk to an attorney about taking over some one else’s loan payments, but Here is my OPNION, and it is ONLY MY OPNION.
When an individual BUYs a home, and has a mortgage, they have qualified to for that mortgage on THEIR income and have pledged that house as collateral for that mortgage. That individual(s) are responsible for mortgage payments. It is a binding contract.
Now part of that mortgage in or around Paragraph 14 is something called Clause 14, or the Due-on-sale clause. This clause means once the home has been sold, that mortgage must be paid in full.
That individual who signed for the loan / mortgage must make the payments. By YOU taking over the payments, you become responsible for the payments. But you did not qualify for the loan.
The transfer of loan payments from one who qualified for that mortgage payment to someone who did not qualify that mortgage payment, that home was sold and the loan is Due-in-full.
Now most loans are no longer assumable, and defiantly None Quailing Assumable loans are not available, so to have that someone take over the payments, in my opinion, is border line Loan Fraud.
Where are ppl getting these ideas?
Contact an attorney would be my advice.
One more thing, How long does thin ice last in West LA ?
and stop going to all those RE easy money seminars.