real estate

[Terry1954]

We live on 5 1/4 acres and want to put a modular home and garage on about an acre for my parents. We don't want to sell the property to them just let them put their home on it. Banks want them to own the property before they will finance their loan. Can we just quitclaim it over to them and then get it back after the closing? We have a mortgage and an equity loan. The bank with the mortgage will release one or two acres but the credit union where we have the equity loan won't. Anyone have any suggestions?
Terry

 

[HomeGuru]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by Terry1954:

We live on 5 1/4 acres and want to put a modular home and garage on about an acre for my parents. We don't want to sell the property to them just let them put their home on it. Banks want them to own the property before they will finance their loan. Can we just quitclaim it over to them and then get it back after the closing? We have a mortgage and an equity loan. The bank with the mortgage will release one or two acres but the credit union where we have the equity loan won't. Anyone have any suggestions?
Terry<HR></BLOCKQUOTE>

You need to talk to a real estate attorney to investigate possible subdivision to get the parcel you need for the improvements or create a master lease or sale lease/back situation. If the mortgage lender will release for 1-2 acres, that is good because the credit union will not have to release, they just go from a second junior mortgage to a first senior mortgage on the 1-2 acres and keep the current second position on the rest of the property. Creativity is what is needed here to see what would work with the lenders given your situation.

 

[Terry1954]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by HomeGuru:
You need to talk to a real estate attorney to investigate possible subdivision to get the parcel you need for the improvements or create a master lease or sale lease/back situation. If the mortgage lender will release for 1-2 acres, that is good because the credit union will not have to release, they just go from a second junior mortgage to a first senior mortgage on the 1-2 acres and keep the current second position on the rest of the property. Creativity is what is needed here to see what would work with the lenders given your situation.<HR></BLOCKQUOTE>

 

[Terry1954]

HomeGuru,
Thank you very much for such a quick reply. I think consulting with an estate attorney is probably what we are going to have to do because we have done nothing but run into brick walls over this the last 3 months. We thought that since it is our property we could do with it what we wanted but we have been shown time after time that is not the case.
So you don't think a quitclaim deed would be enough? We have already applied for a variance but haven't gotten a reply yet and don't think that will help much as far as my parents getting financing but thought it wouldn't hurt. I don't know why we can't just quitclaim the 2 acres over to them, get the financing, and them give it back. It sounds so simple in my thinking but I'm not the one who makes all of the crazy rules. (wish I was)lol
Thanks again for the info.

Terry1954

 

[HomeGuru]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by Terry1954:
HomeGuru,
Thank you very much for such a quick reply. I think consulting with an estate attorney is probably what we are going to have to do because we have done nothing but run into brick walls over this the last 3 months. We thought that since it is our property we could do with it what we wanted but we have been shown time after time that is not the case.
So you don't think a quitclaim deed would be enough? We have already applied for a variance but haven't gotten a reply yet and don't think that will help much as far as my parents getting financing but thought it wouldn't hurt. I don't know why we can't just quitclaim the 2 acres over to them, get the financing, and them give it back. It sounds so simple in my thinking but I'm not the one who makes all of the crazy rules. (wish I was)lol
Thanks again for the info.

Terry1954<HR></BLOCKQUOTE>


Terry, you must remember that it is your property as owners, but it is really the lenders property as mortgagees. Once you obtained financing, you used the property as collateral for the two mortgages. Therefore in the real life world of real estate, your property is really the lenders property until the mortgage loans are paid off.

A variance will not work because you are not changing the zoning or asking fro an adjustment for purposes of zoning or building codes.

The Quit Claim Deed scenario also would not work because even if you transfer the 1-2 acres to your parents, your first and second mortgages would still remain on title because the new owners equity would be subordinate to the 2 mortgages. The first and second mortgages are attached to the property by way of liens on title and are not released until the mortgage is paid off or the lender releases voluntarily. Since you stated that the first mortgage lender would release the mortgage from the 1-2 acres and the second would not, the 1-2 acres if Quit Claimed would still have the second mortgage on title as a first mortgage. And the second would be a blanket mortage covering both properties. So if the principal balance of the second mortgage is $50,000, there would be a $50K lien on both the properties. If the value of the 1-2 acres is less than $50K, there would be no equity in the property for a lender to finance and use as collateral for your parents.

I hope I have explained and answered you in a clear fashion. If not please continue to post on this thread.