Owner occupied note with 2 year balloon originated after 2014

[Jan Gates]

I've been offered to purchase an owner occupied first position mortgage note on a home in Florida, originated in 2016 at 6% with a 30 year amortization but a balloon due in 2 years in 2018. Borrower has defaulted on the payments. I'm concerned that the loan may be out of Dodd Frank compliance due to the short balloon date. The seller did not originate the loan, it was purchased from a private party who did the origination.

Does anyone have any thoughts as to weather this would affect enforceability for foreclosure should the borrower challenge it?

Thanks

[Chris Horlacher]

Jan,

There is not enough info in your description of the loan to know if Dodd Frank applies and whether or not the loan is compliant (falling within one of the exemptions if not originated properly).    Assuming it does apply and the loan is not compliant, that does not mean that the borrowers can never be foreclosed upon, however, the borrowers may raise defenses and/or counter-claims for a set-off and/or recoupment which may cause your deal to be cost prohibitive.   

DISCLAIMER The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship.