I need to sell my home I owe countrywide 208,500.00 but they want to add a presale penalty in the ammount of

Asked by Lori, Keller, TX Thu Feb 28, 2008

8,000.for selling before 5ys that puts my home way aboue the market value to sell my home, and I need to sell my home with no out of pocet cost to me if at all possile,what do I nedd to do ?

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Don Tepper, Agent, Burke, VA
Thu Feb 28, 2008
I'm not a lawyer, so this isn't legal advice. But here's what you do:

Create an Illinois-style land trust. Call it the "Lori [your last name] Land Trust." (The name doesn't matter at all; you could name it anything you want.) Transfer the ownership of your property into your trust. You're the beneficiary of the trust.

Note: Transferring your property into your land trust does not violate Countrywide's due on sale clause. See http://assembler.law.cornell.edu/uscode/12/1701j-3.text.html -- TITLE 12, CHAPTER 13, § 1701j–3. Preemption of due-on-sale prohibitions. Paragraph 8 exempts: "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;"

Now, market the house for whatever market value is. However, what you will be selling is not the house itself, but a beneficial interest in the trust. You then execute a possessory agreement (similar to a lease) with the new purchases. They agree to lease the property from the trust for, let's say, 2 years, or however long you need to go with the mortgage to get out of the presale agreement. The amount of their lease is equal to, or greater than, your cost of principle, interest, taxes, insurance, and any condo or HOA fee. In short, they're paying an amount equal to or greater than your commitment to Countrywide, plus any condo or HOA fees. That money is paid by the resident beneficiaries (the purchasers) to the trustee (the owner), who then appropriately pays Countrywide and your homeowner's association.

The beneficiary agreement provides that after x years (your choice), the property will be brought out of the trust and sold for full fair market value. As a practical matter, though, because the "buyers" (the resident beneficiaries) are also beneficiaries of the land trust, any rise in value will be offset by their ownership rights in the trust. So when the property is brought out of the trust, they refinance the property and the deed is transferred to them. You receive the proceeds--the profits, if any.

I've put a link below with more information. However, it is somewhat complicated. Contact me for more information, if you want. But, to summarize, using this technique will allow you to sell your home with no out of pocket cost to you, other than the cost of setting up the land trust.

Hope that helps.
Web Reference:  http://www.landtrust.net
2 votes
What buyer would do this?
Flag Fri Jan 3, 2014
John Straub, Agent, Fort Worth, TX
Thu Aug 9, 2012
Hi Lori
I hope this email finds you well. Were you able to contact the lender and ask them to waive the pre-payment penalty? The $8,000 sounded like you might be on a bond program or that you received a tax credit was that the case? Those are much harder to have waived. If it was a bond or tax credit you might check to see if making a profit on the sale of your home is a factor in the penalty being enforced. At any rate I hope this has worked out for you and wish you the very best! If I can be of any service to you please do not hesitate to call or email.

John Straub
Keller Williams Realty

0 votes
J, Agent, Greensboro, NC
Tue Nov 8, 2011
Don has offered some solid advice related to your situation. Review your mortgage documents to ensure you will not be triggering the "due on sale clause" related to the potential land trust option. The due on sale clause in mortgage contracts is key in knowing how to proceed in similar situations such as your situation regarding any financing through banks. In NC any transfer of a property deed and rights of occupancy in the property will trigger the clause. A few dollars spent on a good attorney to advise you going forward may be considered money well spent in your situation. Good luck to you!
0 votes
Zeke Baker, , Arizona
Tue Nov 8, 2011
Is the home in pre foreclosure status or going to <a href="http://www.trusteesaledata.com" target="_self" title="" style="font-size:16;color:black;font-family:;text-decoration:none;">trustee sale</a>?
0 votes
Dallas Texas, Agent, Dallas, TN
Thu Jun 2, 2011
Contact my office we offer many listing programs save the property owner money at closing

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
0 votes
Don Keller B, , Keller, TX
Thu Jun 2, 2011
Ask Countrywide if your loan has a soft or hard prepayment penalty. A soft prepayment penalty allows you to sell your home to an unrelated third party without incurring a penalty. Many times customer service won't read past the term "prepayment penalty" to determine how it can be applied.
0 votes
Alicia Chmie…, Agent, Frisco, TX
Fri Oct 1, 2010
You already have received some excellent advice. I must second many in the sense that yes, you should speak with countrywide. Explain your situation and see what options they offer you. If you are not already represented by a real estate agent they may require you list (even if above market value) for a while to assure them it could not sell. Once you have the proof that it's been on the market for x number of days they will probably be more open to negotiations.
0 votes
Cindie Stewa…, Agent, Keller, TX
Mon Dec 15, 2008
I would contact Country Wide and ask them to waive the prepayment penalty. In todays market I think you will find them willing to help with that. If you have an issue please let me know I have a person in there that might be able to help you get that done. You might have to keep asking for their manager till you get someone to help you.
Flat fee might be an option however you will still need to offer a 3% commission to buyers agents out there. The other thing is not against what these companies do we will do something like this. However depending where you home is in Keller will depend on pricing your home correctly and also, get the marketing that will help you get your property out in front of as many buyers as possible over the competition. You will pay this fee up front and if you don't sell you in most cases you don't get your money back.

Bottom line make sure who you do business with YOU trust follow your gut listen and ask a lot of questions. Interview several before you agree to sign.
0 votes
Dallas Texas, Agent, Dallas, TN
Thu Feb 28, 2008
In many instances a Dallas Fort Worth real estate agent that offers Seller Flat Fee MLS listings save your $1000's at closing. We offer this program for only $795 as listing agent refer to our website read the details. You don't want to do a for sale by owner for the fact that you can be sued and having realtor represent is your best option therefore you fall under a realtor errors & ommission insurance policy.
YOU NEED TO GET A COMP on your house to determine all the particulars for your home. You might be ablet to negotiate with the lender they could waive the additional expense. You need to work with a good agent that review all the particulars for $$$,$$$ involved lay it all for you. Contact my office if we can be of any further assistance.
Web Reference:  http://www.lynn911.com
0 votes
Bruce Lynn, Agent, Coppell, TX
Thu Feb 28, 2008
You can ask them if they will help you negotiate a short sale. However if you have money or good credit or savings, they may likely want you to help contribute to the loss.
I've never seen a 5 year prepayment penalty. I have seen 3year. Remember you will also have approx $16,000 or so closing costs on a sale that size.
Web Reference:  http://www.teamlynn.com
0 votes
Keith Sorem, Agent, Glendale, CA
Thu Feb 28, 2008
Have you talked with a Realtor? There are too many questions that I do not know the answers to right now, however I think a good Realtor might be able to help you. If you are headed for a short sale, then you might want to read my blog

Good luck. Don't wait, act now.
0 votes
Jeff Kessler, Agent, Austin, TX
Thu Feb 28, 2008
You could call them and see what they say. They may work with you if you can show hardship. I have seen it work only once though, but it is worth a shot.
Are you looking to buy another home?
You could maybe work something out that way.
Email me for more info if you like.
0 votes
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