Agreement for Deed and Other Questions - Part I

Part I

Can a second mortgage holder force a foreclosure? This is a question you might be asking yourself if you are in the situation! The answer to that is: Certainly. Now of course it certainly cannot hurt the first mortgagee’s position but they can certainly force a foreclosure. In fact, I have done it myself and actually do it quite often.

Here is the next question you are probably wondering.

Does a private lender resist being in second position? Most of them do if they are in the business of lending money. However, individuals that you go to will make you private loans as long as you explain to them that the loan to value ratio is the same. If you take into consideration the first and add their second to it, the two combined is their loan to value ratio. The good thing about putting people in second position is it usually a much smaller amount of money, therefore reducing the risk as well.

Think about it-in reality, they are really lending to you and the property is just collateral. They are expecting you to pay it back and I know quite a few people who actually break the rules on second mortgages (and borrow more than I'd like to see them borrow but as long as it gets paid back it doesn't much matter). What does this really do? It gives people a place to put small amounts of money and get a good rate of return on it. It is very difficult for them to find in other places with those small amounts. With that being said, this is exactly what should be clear to you. Now here’s another question for you. Would you ever put someone in a house or a land contract if they had less than 10%? I would have to say yes, but that is going to hinge largely on what state you live in. Say for instance you live in the state of Georgia. With Georgia, the answer is yes except it is agreement for deed. Fortunately, that is one of the fastest reclamation states there is! You can ask anyone in the business and they will tell you the same. You can literally have somebody kissing the curb 30 days after you start the process up there on an agreement for deed.

In part two we will continue our scenario with the agreement for deed.

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