How to set up owner financing

Question

I have a client that is willing to allow me to owner finance his property. What I would like to know is can I then owner finance it out to someone else and collect the difference on my terms? I want to know how to set up an owner finance deal without having to just assign it.

Seller will sell to me with 4k down and $400/month. I know I can sell for 10k and 800 month. How do you work this deal? Thanks

Gautam Venkatesan · Answer

Yes it is. The wrap around the current lien from the seller to you is not affected by Dodd-Frank (since you are not going to live in the property) but the wrap from you to the end buyer would need to comply with Dodd-Frank assuming the end buyer is an owner occupant. In both wraps the due on sale clause is something the current lien holder can call due. Definitely get with a knowledgeable attorney.

Marlon Wilson · Answer

Hey @Gautam Venkatesan

It actually does have a mortgage on it. Is it still possible to this kind of wrap? Thanks for everything

Gautam Venkatesan · Answer

@Marlon Wilson

does the seller (your client) own the property free and clear or is there an underlying mortgage?

It will be much easier to do what you are asking if the property is owned free and clear, in which case you need to work with an attorney/title company to draw up the promissory note, deed of trust, etc. and then you could "wrap" a new note around the first note from you to the retail buyer.

Dave Savage · Answer

I would first check out the recent posts on the new Dodd Frank rules, espeically with posts from @Bill Gulley to learn about the new rules for 2014 and beyond.  The use of a mortgage servicer may be required to meet the new rules at a minimum.  This isn't 2013 anymore and you don't want to run into issues surrounding mortgage fraud.