Trust Deed Buyers

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.”

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What is a deed of Trust ?

A deed of trust, also known as a trust deed, is a unique form of loan recorded within public records as a deed that has a lien on the property. Trust deeds are used by borrowers instead of conventional mortgages. This is usually done in order to obtain greater flexibility on the loan that would be available under the rules and regulations in standard lending institutions such as banks.

With a deed of trust, there are three main parties involved. These parties include the trustor - which is the person who is borrowing the money - the beneficiary - also known as the lender - as well as a neutral third party. This third party is the trustee, who temporarily holds part of the property title until the loan is paid in full.