Selling house to tenant while keeping my low interest loan

[Dan Griffin]

This may be a basic question -- but I don't know the answer.

I have a house in another state that I used to live in. We moved, but kept the house because we had a 2.625% loan on it -- and there was a possibility that we may come back after a few years. I'm a little cash flow negative each month.

The tenant has a great job now and makes a good salary -- but has some pretty bad dings on his report.

What's the best way to sell the house to the tenant? I have a low interest loan and he would likely only qualify for a really high rate. Is there a way to keep my loan and let him buy from me?

[Don Konipol]

This is like old world (prior to January 10th 2014) and new world (after January 10th 2014).

The old guard of lease option and subject to selling to owner occupants are fighting tooth and nail to find a way around Dodd Frank and CFPB. Included in tactics are denial, constitutionality, misuse of exemptions, far out legal theories, etc.

I HATE Dodd Frank and CFPB too! However, it is DANGEROUS to act as if it doesn't exist, and/or use dubious legal theory to try and not comply. The semi socialist government we now deal with will go to extremes to enforce all provisions. We must recognize the Act in any transactions that may apply. Of more concern to me is the private attorneys that will convince owner occupants to sue lenders; if you're sued you lose even if you win in court.

I hate to say it, but I am afraid we will find that many real estate models concerning the sale of houses to people unable to qualify for conventional financing will no longer be viable. This is as simple as understanding that what works with owner financing at 10% does not work at 5%, or that risks, liabilities, servicing fees, underwiriting fees, professional fees, etc. have increased tremendously. I for one will NEVER be involved in a owner occupant loan again; as far as I am concerned it not worth the risk, aggravation or costs.