All Inclusive Trust Deed

Filed under: All Inclusive Trust Deeds,Deed Of Trust by Frank Mori |

Recently I stumbled upon a blog. This blog author is Scott Mazza from Simi Valley (California). Scott is a real estate agent for more than 10 years. You can see Scott’s profile here.

The reason I’m writing about this blog is because he clearly explain what is an “All Inclusive Trust Deed“. To make a long story short, this kind of deed of trust secures a wrap-around loan, which loan incorporates an existing loan, with a new loan made by the Seller of a property.

Here is his example:

“For example , the sales price is $200,000, there is an existing first trust deed securing a loan with a balance of $150,000, with an interest rate of 7%, the Buyer has $20,000 cash to put down; therefore, an AITD is created in the amount of $180,000 at 8%. The AITD wraps around the existing $150,000 at, and the Seller makes 1% on the $150,000 at 8%, on the $30,000, thereby effectively increasing the yield.

The Buyer makes payments based upon the $180,000 balance, and the Seller makes the payments on the existing loan secured by the first trust deed.

The terms of the AITD, such as rates, maturity date, payment amount, late charges and prepayment penalty are completely negotiable.

In the event the first trust deed and note contains a “Due On Sale Clause,” the parties will want to seek legal and tax counsel as to the ramifications of doing an AITD.”