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I had a recent deal in NJ. I have a home valued at 270-290k in this market had sent out my appraiser. The mortgage pay off sits at 110k. The home owners were about to loose it the next day at the sale. I had given them the idea to reinstate the mortgage back into regular payment since it was only the second mortgage defaulting for a reinstatement for $2,750.00. I have let them live in the property. They have given me the deed and many other papers in order to secure my position. The agreement was to give me a option on the property to purchase it for the amount of the remaining mortgage and to give me first right or refusal of redemption if the property would default again. I would like to know how you would put that into a mortgage note to secure a option? Thanks ahead Roger
Roderick:
Need some more information. You said you have a deed. A deed conveyes ownership. Have you bought the property subject too the first and second? I do not understand the option if you “got a deed”. What is the balance of the first and second? What is the payments on the first and second? What is the terms on the first and second?
What you will want is a mortgage of option to secure your position, which you will record.
Jackie and others please chime in.
Don Wede
I have not recorded this deed yet. The homeowner is very open to me and agreed to sign a mortgage to protect my position on this property. I had wanted to put a mortgage on the property for the $2,750 I had given them to reinstate there mortgage. I had wanted to place a option on this property with the mortgage and needed some verbage to put into the mortgage. I am looking to have first right or refusal of redemption if they loose this property again if it happens to fall into foreclosure and also have a call option to purchase for the amount left out on the mortgage. Thanks Roderick
first mortgage is about 73k and second mortgage is arounf 37 k I had paid arrears already via western union for about $2,750. I just need to know the verbage for the mortgage to write. I just want it to say no other mortgages can subordinate over my mortgage, first right to redeem, and option to purchase for the reminder amount of the mortgage. Thanks Roderick
Roderick:
With the information at hand (good first and second mortgage?) I would just have the people deed the property into a land trust. You then buy the bennifical interest in the land trust for the consideration of taking over the exsisting debt. Buy this subject to the exsisting financing.
If the sellers want to stay in the property for awhile have them sign a lease.
If you want to do the option and not go into ownership that is ok also. The verbage that you need you already have. Put in the mortgage just what you spelled out above. Have your attorney put it together if you want.
If you want send me an e-mail and I can send you a mortgage of option that I use. You or your attorney review and revise.
Don Wede
P.S.
There is to much equity left in the deal. Something sounds amiss.
Don Wede
I don’t understand what your option is for. Did you bring the loan current then you get ALL the upside?
What does your option entitle you to?It sounds more like a $2750 loan at this point.
I really hope that you are not letting the sellers stay in the house with a lease and an option to buy it back.
That could get you in trouble.
Roderick:
Listen to Jackie, do not give the past owner an option to buy back.
Don Wede
If they are just leasing then you need a purchase agreement from the sellers to you.
Then, the best thiing would be to take it to a title company or attorney to get them to prepare the warranty deed and all other documents to convey title to you so you OWN the house ( not just an option)
It is a BIG MISTAKE to prepare your own documents when you’re new!!!!!!!!!!!!!!!!!
Jackie
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