Can I sell a carry back loan without telling the buyer?
Let's say I sold my home for 400K, but the buyer only had a 350K loan, so I carried the remained. After escrow closes can I sell the buyers second trust deed to someone else without telling the buyer?
- Tony RBLv 77 years agoBest Answer
When you create the contract for your second trust deed, you will record that you have a lien on the property, and later you will record this lien at the county courthouse. No record means all you have is an unsecured loan to the buyer.
You don't have to have the permission of the buyer to sell that second trust deed, but you do have to record at the county courthouse that you are no longer a lienholder on the property, and the buyer of that deed records their lien on the property. And the buyer can go to the courthouse at any time to see who the current lienholders are on the property.
Wall Street did this with collateralized debt obligations (CDOs) where they used the MERS to be the "trust" holding the liens for the investors, and hidden behind MERS the investors could buy and sell liens without having to record who actually held the lien, thus the buyer never knew what investor owned what lien. And the liens could be "gathered together" and then sliced into tranches, which further obfuscated ownership.
This is one of the reasons the crisis that began in late 2008 lasted so long, no one was willing to buy a property that had a clouded title, because who the heck actually owned the lien ?
Mortgage Electronic Registration Systems