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#2034267 - 08/18/15 04:30 PM Lease the Land, Own the House
Bec Offline
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Bec
Joined: Jul 2010
Posts: 1,114
The Great White North
We have a customer that would like to purchase a large parcel of land. Lease out the land and have those leasers build houses on it. The mortgage for the leasers would be executed by the bank but the customer would take full recourse. Has anyone ever performed these kinds of loans and if so, where do you start with regulations. For instance, if we are extending construction to permanent one step loans, it would not be covered by RESPA because they don't own the dirt right?

Any insight will be appreciated.
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Lending Compliance
#2034433 - 08/19/15 06:46 AM Re: Lease the Land, Own the House Bec
Bec Offline
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Bec
Joined: Jul 2010
Posts: 1,114
The Great White North
bump
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#2034434 - 08/19/15 08:06 AM Re: Lease the Land, Own the House Bec
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,292
There should be long term land leases to the homeowners. The leases are assigned to the bank. The lease must be at least as long as the mortgage and preferably longer in case the bank ends up with the property.

The land lease triggers RESPA.

The bank needs to get legal counsel involved to make sure you set up a good process.
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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