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MBS again
Old 05-14-2018, 08:42 AM   #1
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MBS again

I was talking to a planner about a month ago after wife dragged me to his dinner presentation and I agreed on a follow-up visit. He did give me some good advice on an umbrella policy and as we were leaving, he mentioned that he could put me in some short term mortgages. I didn't get lots of details but he did say that your name would go on the deed and it would get registered with city or county as a lien against the property. As we were walking out, he mentioned that the last ones he had setup paid 8-9%.
Now it seems to me if you are getting a loan say to flip a house, you would have to pay a premium to a regular mortgage rate and if you don't live in the home there is also a premium. So a premium above the current 4.5% rates seems called for.

My questions are:

1) Does this sounds like an example of if it sounds too good to be true it probably is;
2) If I were to bite on this fish, how would you check it out ?
3) How much of a premium over the 4.5% owner occupied rate is normal ?

Thanks for any insight to current experiences or how to check this out.
I don't think I'll bite on this anyway, I'll retire in 4 months so I want other financial and personal matters to be calm. ha
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Old 05-14-2018, 09:08 AM   #2
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Sounds like the borrowers can't qualify for a bank mortgage so they are going peer-to-peer.... not anything I would be interested. IIRC there are some members who do these loans and I suspect that they will respond.
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Old 05-14-2018, 09:10 AM   #3
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How could this possibly not make you rich! Sounds like a real winner (sarcasm)!

Seriously, if your name is on the deed, then you presumably have some responsibilities to the city or county.
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Old 05-14-2018, 11:04 AM   #4
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Quote:
Originally Posted by HawkeyeNFO View Post
How could this possibly not make you rich! Sounds like a real winner (sarcasm)!

Seriously, if your name is on the deed, then you presumably have some responsibilities to the city or county.
And you should also buy liability insurance.
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Old 05-14-2018, 12:02 PM   #5
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Sounds like a 2nd mortgage. In event of default you are behind the 1st holder.

Guy probably threw out the 9% to get your interest as you are walking out the door. I think it worked

edit: Or a hard money loan. Which should be >10-12%. Too much risk for me with not enough coupon
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Old 05-14-2018, 12:13 PM   #6
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Quote:
Originally Posted by Scrapr View Post
Sounds like a 2nd mortgage. In event of default you are behind the 1st holder.

Guy probably threw out the 9% to get your interest as you are walking out the door. I think it worked

edit: Or a hard money loan. Which should be >10-12%. Too much risk for me with not enough coupon
So seems that those that have responded agree it is something to be avoided. Have to agree. Thanks !!
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Old 05-14-2018, 03:30 PM   #7
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Run from this guy and never look back.
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Old 05-14-2018, 06:01 PM   #8
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Quote:
Originally Posted by HawkeyeNFO View Post
Seriously, if your name is on the deed, then you presumably have some responsibilities to the city or county.
I know you've already decided to avoid this "opportunity" (I would, too) but the statement that you'd be on the deed didn't sound right at all. Typically a deed just says that the described property is being conveyed from Person A to Person B. If Person B took out a mortgage to raise the money to buy it, that's a separate piece of paper and your name would be on THAT as the lender (mortgagee).

If it really is an investment in which the investor is named in the deed, it may be an installment sale. Person B wants to buy the house. Person C, the investor, has the money. In that case, Person C has title to the property and Person B agrees to make regular payments of $X per month for Y years and after that Person B turns it over to Person C. A lot of stuff can go wrong in between.
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Old 05-15-2018, 05:44 AM   #9
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I don't own property for the first time in my adult life; so I direct some of my investment capital to REITs and let the paid professionals perform the due diligence and management tasks, all for about the same 8-9% and total liquidity. Much easier!

-BB
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