Monday, April 23, 2007

By Benny L. Kass
The Washington Post

Worried sellers are again considering financial incentives, including taking back a second mortgage to entice buyers.Several factors can make a second trust, as it is often called, attractive to buyers and sellers, including:

• The buyer won’t need to come up with so much cash.
• The seller can set the interest rate below what the buyer could get almost anywhere else.
• A seller can defer a portion of any capital gains tax he might owe on the property.

But there is also at least one big negative to consider. The second trust will be recorded in the land records after the first loan and always will be in the second position. If the first loan goes into default and the lender forecloses on the property, the second trust will be wiped out. The seller holding the second trust can sue the borrower based on the promissory note that is usually signed, but that might be pointless if the borrower has no money.

Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula