Wrap Traps

From: Simon and Julie M


A question for the wrappers.

If I were to purchase a house from a wrapper, what guarantee would I, as wrappee, have against the wrapper defaulting on mortgage payments to his/her bank.

That is, if I am up to date with my payments to the wrapper but they in turn fall behind in their own payments to their bank, where does this leave me?

Julie
 
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Reply: 1
From: .watto .


As far as i can see the wrapee would become a creditor along with all others owed monies.

A trap that concerns me is the possibility of the wrapee wanting to go on title at the last minute. This can not be contracted out of. This then leaves the wrapper in a second mortgage position.

I would love any input on the above as this is only my interpretation....

Cheers
Watto
 
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Reply: 1.2
From: Paul Zagoridis


IF I was buying a wrap I would

1) place a caveat on the title as a condition of purchase. 2/3 of my wraps have done that. I have no problems with it.

2) Insist on copies of the underlying loan statements at at least 3 monthly intervals.

If the wrap seller won't do that I'd pass on the wrap.

Paul Zag
Dreamspinner
The Oz Film Biz site is archived at...
http://wealthesteem.dyndns.org/
 
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Reply: 1.1.1
From: .watto .


Jeremy Laws said...

>"Wrappees take out a caveat on the property"

The definition of "caveat"

caveat was Word of the Day on December 5, 2000.


Source: Dictionary.com Word of the Day


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ca·ve·at Pronunciation Key (kv-t, kv-, käv-ät)
n.

A warning or caution: “A final caveat: Most experts feel that clients get unsatisfactory results when they don't specify clearly what they want” (Savvy).
A qualification or explanation.
Law. A formal notice filed by an interested party with a court or officer, requesting the postponement of a proceeding until the filer is heard.

v. ca·ve·at·ed, or ca·ve·at·ted ca·ve·at·ing, or ca·ve·at·ting ca·ve·ats or ca·ve·ats
v. intr. Law
To enter a caveat.

v. tr. Informal
To qualify with a warning or clarification: The spokesperson caveated the statement with a reminder that certain facts were still unknown.


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[From Latin, let him beware, third person sing. present subjunctive of cavre, to beware.]

Source: The American Heritage® Dictionary of the English Language, Fourth Edition
Copyright © 2000 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.


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caveat

\Ca"ve*at\, n. [L. caved let him beware, pres. subj. of cavere to be on one's guard to, beware.] 1. (Law) A notice given by an interested party to some officer not to do a certain act until the party is heard in opposition; as, a caveat entered in a probate court to stop the proving of a will or the taking out of letters of administration, etc. --Bouvier.

2. (U. S. Patent Laws) A description of some invention, designed to be patented, lodged in the patent office before the patent right is applied for, and operating as a bar to the issue of letters patent to any other person, respecting the same invention.

Note: A caveat is operative for one year only, but may be renewed.

3. Intimation of caution; warning; protest.

We think it right to enter our caveat against a conclusion. --Jeffrey.

Caveat emptor [L.] (Law), let the purchaser beware, i. e., let him examine the article he is buying, and act on his own judgment.
Source: Webster's Revised Unabridged Dictionary, © 1996, 1998 MICRA, Inc.


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caveat

n 1: a warning against certain acts: "a caveat against unfair practices" [syn: caution] 2: (law) a formal notice filed with a court or officer to suspend a proceeding until filer is given a hearing: "a caveat filed against the probate of a will"
Source: WordNet ® 1.6, © 1997 Princeton University


Exactly what does a caveat give to the wrappee?


Cheers
Watto
 
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Reply: 1.2.1
From: Mark Pardi


caveats are the answer to this

all your fellow forum posters know there stuff

the advise on the bank statements is also good

the definition of caveat is also very precise

happy wrapping!!!!
 
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Reply: 1.2.1.1
From: Simon and Julie M


Thanks Guys
The reason we asked that question was that on the weekend we went to an open for inspection of a would be wrap property. The wrapper displayed very little skill and ability in sales and therefore prompted me to wonder also about his credibility. The property was inflated 60K on the previous sales in the street. It was also in a very ordinary condition for the money he was asking. I wish I could have taken a video of the whole episode so that I could show it to all would be wrappers as a "This is not what to do when wrapping a property" training film. All I can say is you should have been there. It was a classic.
by the way. We are not wrappers but respect the strategy as another way to create capital and cash flow.
Kind regards.
Simon
 
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Wrap Traps Foxes in the woods

Reply: 1.2.1.1.1
From: Anonymous


Sounds sorta like letting the foxes look after the chickens?
 
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Wrap Traps Foxes in the woods

Reply: 1.2.1.1.1.1
From: The Wife


If a landlord ups the rent, is he a fox?

Cheers TW
 
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Reply: 2
From: Michael G


Hi,

Work out a way that prevents them from directly managing the funds in some way, ie jointly agree for the funds to be managed by an account manager who then pays the mortgages and pays the profits to the wrapper. That way the only way the loan can default is if the wrappee (you) defaults.

Michael G
 
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Reply: 1.2.1.2
From: Michael G


Hi,

Caveates dont prevent wrappers from not paying mortgages, they only prevent from from selling wrapped property from out under the wrappees notice.

If loan is not paid, the mortgage goes into default regardless of whether a caveat exists or not.

The answer lies in working out a way to take the responsibilty of paying the mortgage OUT of the wrappers hands.

Michael G
 
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Reply: 1.2.1.2.1
From: Paul Zagoridis


Hi Michael welcome back

A caveat can protect your financial interest in a property. The underlying first mortgage is potentially capped at the amount owing at the time of the caveat plus penalties and reasonable sales expenses. Normally this will total less than the markup on the wrap.

That is why it is important for the buyer to know the state of an underlying mortgage on a monthly basis.

Therefore techically a wrap buyer could negotiate with a mortgagee in possession to bring the loan current and thereby "assume" the loan. Discuss this strategy with a competent advisor.

Paul Zag
Dreamspinner
The Oz Film Biz site is archived at...
http://wealthesteem.dyndns.org/
 
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