Wrap-around mortgage - need advice

Has anyone run across a situation like this?  Two families (wives are sisters) purchased a property. Purchased in Couple 1's name with a first and a HELOC. Then they had a lawyer document a wrap-around mortgage and deeded to Couple 2, who have been living in the home for 4 years.

 

With a combination of diagnoses of serious illnesses and loss of income, they need to sell. Meeting with lawyer and accountant this week.  Has anyone tried to do a short sale where the underlying loan is in one name and the deed in another?  All I can think to do is unwind the arrangement and get title back into Couple 1's name...although for them it is then an investment property.

 

Mahalo (thanks) in advance for any guidance.  

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Permalink Reply by Beth Thoma Robinson R(B) SFR on July 4, 2011 at 9:51am

Hi Maria and Donna

Thanks for your comments.

Maria--the point Donna brings up is actually the issue. There were due on sale clauses in both 1st and HELOC, plus a 12 month occupancy requirement, so I did not want to expose my Sellers to any difficulties from their lender on ss approval due to them having violated provisions of their mortgage.

Donna--just got the paperwork from the lawyer this weekend for both couples to sign, release of mortgage and deed back into Couple 1's name. It turns out the accountant has been treating it as an investment property already.  And most of my short sales here are for 2nd home/investment properties rather than primary residences.

From here on out this will be straightforward...or at least as straightforward as any short sale LOL

 

Permalink Reply by Donna McClelland on July 4, 2011 at 6:21pm
LOL, yes!  Thanks for letting us know what the atty suggested. 

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