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#715742 - 04/12/07 08:29 PM Abundance of Caution!
D2Xs Offline
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D2Xs
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We are doing an unsecured loan for a loan of about $500k for a short term of three months. The banker wants to take the home as an "abundance of caution" however he only wants to take a lien position by getting by a signed mortgage.

Can we do this? Does this make it a secured transaction and are all the disclosures for a secured transaction needed?
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#715746 - 04/12/07 08:33 PM Re: Abundance of Caution! D2Xs
Skittles Offline
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TN
Yes, everything applies. The only thing the 'abundance of caution' statement will get you out of is the appraisal requirements. You will still need a flood determination, etc.

Additionally, if the loan fails and the mortgage has not been filed your bank could lose it's lien position.
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#715776 - 04/12/07 08:54 PM Re: Abundance of Caution! Skittles
SavannahOne Offline
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Georgia
Banks that do not file mortgages, but issue Mortgage Interest Statements, are potentially guilty of conspiracy to commit tax fraud.

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#715779 - 04/12/07 08:59 PM Re: Abundance of Caution! Skittles
D2Xs Offline
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Skittles can you point me to a place that says this?

Thanks,
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#715912 - 04/13/07 12:58 PM Re: Abundance of Caution! D2Xs
Skittles Offline
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TN
I don't think it does say that, it just doesn't say that you have an 'out' with abundance of caution. You might check with Dan or another guru to see if there is further clarification.
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#715925 - 04/13/07 01:14 PM Re: Abundance of Caution! Skittles
Dan Persfull Offline
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Bloomington, IN
Once you have them sign the mortgage you have a security interest in that property, whether you prefect that security interest or not does not matter, you still have the security interest and you can always perfect it at a later date.

Therefore your loan is secured by a security interest in the property and all applicable regulations will apply.

The flood regulation is very specific. From page 20 of the Mandatory Purchase Guidelines:

The mandatory purchase provisions apply even on those loans where real estate is secured out of "an abundance of caution."
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