Doing Wrap Mortgage

[Account Closed]

If i do a subject 2 and seller financing, do i give the title to the buyer and lose my advantage in depreciation, tax advantages and appreciation/equity? 

Then does it go the same with lease option?

[Bill Gulley]

Well, looks like this has been covered; except a seller always has recourse, it's a law suit for actual and/or consequential damages. Pay attention to the Act Brian posted, exception is that the deed is transferred for estate planning purposes. 

A deed may be transferred with other encumbrances or limitations with a "Subject-To" transaction, I can buy a property from the owner in title a contract for deed or an option, if either other buyers fail, I own it. 

Your "wrap" is a mortgage that includes another underlying mortgage, this should be set up as a second in addition to the first, $40,000 payable to Mr. Seller, $60,000 payable to Da Bank, but written as one obligation of the total amount due being $100,000. The reason is for compliance under Dodd-Frank and predatory lending because you can not very easily match amortizations and contributions to principal of a newly created loan obligation to an existing seasoned obligation. Matching amortizations is possible with a short term blended note, some very creative note writing and weighted average interest rates from a two part note or a partitioned note, but I really doubt anyone is doing that. I have discussed partitioned notes on BP before, not for newbies or even your RMLO to design.    

A Sub-To may or may not have excess equities owing to the seller. If there is, I can use a second mortgage under my Sub-To sale agreement and "assume" the existing mortgage; effectively the same as a Wrap, but different with different ramifications as mentioned by others.  

Might think of this as "Subject To's are Super, Wraps are just Wrong", investors (especially older, been there done that, investors) need to get away from the Wrap approach of having one larger obligation that contains an existing obligation in residential settings.      

While these transactions may convey title, the bottom line is that they are all installment sales to an extent, that for good title to pass the purchase price must be paid, a note represents` payment, but the note must be fully paid to complete the sale. Under the UCC, installment sales are terminated upon default and property reverts back to a seller, this angle can then be used to sue for a judicial foreclosure, see your attorney. :)