Assigning CA aggreement with FHA loan Question

[Tmartinloan 0]

Just say you do a Cooperative assignment and collect a 3.5% non refundable option deposit money and assign you contract to a T/b. The T/b will then need another 3.5% down payment to purchase the home with FHA financing.

 

The option deposit of 3.5% is just that option money and cannot used for the down payment.

 

The buyer would then have to come up with another 3.5% to purchase the home. Any ideas on how to use the assignment money as the down payment? Or the best way to structure a lease option with the anticipation for FHA financing?

 

Any ideas are appreciated?

Only other Idea I has is that if you were a realtor you could collect 3.5% upfront as a commission.

 

 

Thank you

Thomas Martin

911loan@gmail.com

[MichaelC 160]

Thomas, when doing a CA, the option consideration you receive is also a credit towards the purchase of the property. That credit may be in the form of either a credit towards the purchase price, or it may be considered part of the buyer's down payment. Ultimately, it will be the lender who decides. A t/b can always shop around for terms they prefer.

[Guest jvmccall]

Thomas, that is a good question and gets asked a lot. I did some research and digging.

 

I called John Jackson in TX, and he told me that he has been doing this for 6+ years and never had any issues getting the option consideration as part of the tb's down payment. He works with an investor friendly mortgage broker in his area who knows his CA business inside and out. Never had any problems. Never.

 

I also talked to a mortgage broker here in my neck of the woods who has done a lot of lease option financing. He did say that if you didn't set it up right, it could cause some lenders to trip up. But he had a great idea if this whole thing is a big concern for you.

 

Have the option consideration check from the tenant-buyer made out to a Title Company. And then have the Title Company cut you a check after you assign the lease option agreement. That way, you can prove to the bank that the option consideration money went to a Title Company & was cashed.

 

Finally, look at this scenario... A seller lease options their property to a tenant-buyer. The original seller decides to sell their house and assigns the lease option to the new buyer. The tenant-buyer stays in the house - nothing changes for them except for who they send their rent to. The tenant-buyer then gets their credit fixed, gets approved for a mortgage, exercises their option and buys the house. Would any bank say that the tenant-buyer's option money paid to the original seller was no longer valid because the original seller sold the house? Probably not. I don't know if I explained that well enough, but just think about what happens when a lease option property gets sold and the lease option agreements get transferred to the new owner. That is really all that is happening.

 

It's very important to find an investor friendly bank / mortgage broker who understands credit repair and financing lease option tenant-buyers - who will not just say they understand, but has done them before.

 

Does that help any?

[MichaelC 160]

Finally, look at this scenario... A seller lease options their property to a tenant-buyer. The original seller decides to sell their house and assigns the lease option to the new buyer.

The seller doesn't have the right to sell the house to a third party after entering a lease option agreement. They have an obligation to sell it to the t/b should the t/b exercise their option. In fact, there would likely be a Memo recorded to prevent just such an occurence by an unscrupulous seller.

[Tmartinloan 0]

What would happen if the seller decided not to make the mortgage payment, I collected the Non refundable option deposit to purchase.

 

This is happening alot in FLorida, would the T/b come after me? Would I have any liablility?

 

How do i protect myself?

 

thank you

[<Steve> 82]

Last spring Obama signed a federal law allowing the tenant to stay in the property through the end of the lease term should the owner of the house go into foreclosure. The tenant now pays rent to the bank. Now the question is what about a tenant/buyer? From what I am seeing if the tenant/buyer wants to exercise the option, the bank is more than willing to take their money, and the bank may even consider a short sale. Typically though the bank will offer the tenant some $$ to move after foreclosure. If the tenant moves the owner can be liable for the tenant's moving cost and expenses of getting into another property, and the owner may even be responsible for paying the difference in rent for the new property the tenant moves into. However, the $$ liability of the owner to the tenant is minimal and would be decided in small claims court as a civil suit. In a CA the tenant/buyer and seller have agreed to release you from any liability as per the Assignment Agreement.

[Tmartinloan 0]

Well we all want to give our tenant buyers confidence that the seller is going to make timely payments. Would it be a good idea to have the seller sign a authorization to release information to the T/b can call the bank and make sure the rent payments are being applied to the mortgage?

 

Or at 9th hour at the closing table get the seller sign an affidavit stating that they will apply all rent payments to the mortgage?

 

Any thoughts?

 

Thanks

Thomas Martin

911loan@gmail.com

[Tmartinloan 0]

Have the option consideration check from the tenant-buyer made out to a Title Company. And then have the Title Company cut you a check after you assign the lease option agreement. That way, you can prove to the bank that the option consideration money went to a Title Company & was cashed.

 

Finally, look at this scenario... A seller lease options their property to a tenant-buyer. The original seller decides to sell their house and assigns the lease option to the new buyer. The tenant-buyer stays in the house - nothing changes for them except for who they send their rent to. The tenant-buyer then gets their credit fixed, gets approved for a mortgage, exercises their option and buys the house. Would any bank say that the tenant-buyer's option money paid to the original seller was no longer valid because the original seller sold the house? Probably not. I don't know if I explained that well enough, but just think about what happens when a lease option property gets sold and the lease option agreements get transferred to the new owner. That is really all that is happening.

 

 

Good POINT!

 

So get my T/B to make the check out to a title company and then sign all lease aggreements at the title company and then get the documents notorized.

 

Thanks a great idea.

 

Thanks

Thomas Martin

[Tmartinloan 0]

Last spring Obama signed a federal law allowing the tenant to stay in the property through the end of the lease term should the owner of the house go into foreclosure. The tenant now pays rent to the bank. Now the question is what about a tenant/buyer? From what I am seeing if the tenant/buyer wants to exercise the option, the bank is more than willing to take their money, and the bank may even consider a short sale. Typically though the bank will offer the tenant some $$ to move after foreclosure. If the tenant moves the owner can be liable for the tenant's moving cost and expenses of getting into another property, and the owner may even be responsible for paying the difference in rent for the new property the tenant moves into. However, the $$ liability of the owner to the tenant is minimal and would be decided in small claims court as a civil suit. In a CA the tenant/buyer and seller have agreed to release you from any liability as per the Assignment Agreement.

 

 

Steve that is a good bullet to explain to T/B

 

Thanks

[Guest jvmccall]

Finally, look at this scenario... A seller lease options their property to a tenant-buyer. The original seller decides to sell their house and assigns the lease option to the new buyer.

The seller doesn't have the right to sell the house to a third party after entering a lease option agreement. They have an obligation to sell it to the t/b should the t/b exercise their option. In fact, there would likely be a Memo recorded to prevent just such an occurence by an unscrupulous seller.

MichaelC, you're right. The seller could only sell the house to someone who assumed (or took over) the existing lease option agreement. In other words, they would sell it to another investor. If this happened, the bank would allow as a down payment the original option consideration that was made out to the old owner.

[Tmartinloan 0]

Finally, look at this scenario... A seller lease options their property to a tenant-buyer. The original seller decides to sell their house and assigns the lease option to the new buyer.

The seller doesn't have the right to sell the house to a third party after entering a lease option agreement. They have an obligation to sell it to the t/b should the t/b exercise their option. In fact, there would likely be a Memo recorded to prevent just such an occurence by an unscrupulous seller.

 

 

 

What woulld that memo look like?

 

thanks

[MichaelC 160]

Thomas, first, you asked the same question in a separate thread about a homeowner not paying the mortgage. I replied there. Try to keep your questions organized. Thanks.

As regards a Memorandum, you have a copy from when you purchased my manual.