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#1197547 - 06/08/09 08:22 PM Contract for Deed/former OREO
sunshinebanker Offline
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Our bank re-sold a condo that was formerly in OREO. The condo was sold to an individual and bank received a significant down payment. Remaining balance was put into a conract for deed with our bank, interest only for 3 years and a ballon. We used lawyer prepared docs as our loan platform system does not produce these documents.
wouldn't this "loan" be subject to various regulations such as: Reg Z/ HMDA/RESPA/flood/CIP/FCRA/Reg B?

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#1197804 - 06/09/09 01:34 PM Re: Contract for Deed/former OREO sunshinebanker
rlcarey Online
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Galveston, TX
A contract for deed is not a loan. Why would the bank do this?? It would not get the OREO off the bank's books for at least three years.
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#1201287 - 06/15/09 06:02 PM Re: Contract for Deed/former OREO rlcarey
sunshinebanker Offline
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customer made a substantial down payment- enough to qualify for it to move from OREO to a loan. customer currently owns another residence, which is for sale. Sale proceeds will be used to pay off this contract when current residence is sold. Contract for deed is for 3 years, interest only with a balloon. Bank used creative financing to get it off OREO but I see this as a consumer loan, where consumer consumer would apply.

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#1201306 - 06/15/09 06:12 PM Re: Contract for Deed/former OREO sunshinebanker
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Quote:
enough to qualify for it to move from OREO to a loan.


Then it's either a loan or not. If it's not a loan then as Randy said you can't remove it from OREO because you still hold title to the property.


Quote:
Bank used creative financing to get it off OREO


Sure sounds like a consumer loan to me.

IMO all consumer loan requirements would apply to this loan.

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#1242345 - 08/31/09 08:30 PM Re: Contract for Deed/former OREO Dan Persfull
Tesla Offline
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Bringing this one back up (Sorry). Now with all the new E-TIL disclosure requirements etc, I am wondering, if you do a contract for deed, what do you do if you don't have an application or purpose statement? In this case, the lender just found someone to purchase the property, hired an attorney and had the borrower sign a contract for deed. There is no supporting or other information, meaning I don't how or if they were qualified for the loan, if they CIP'd him/her, if they are using the premises for business or personal purposes, etc. (I did check and we are still considering it OREO.) Can I just rely on the lender's statements? (Nothing in writing).
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#1242363 - 08/31/09 08:47 PM Re: Contract for Deed/former OREO Tesla
Dan Persfull Offline
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Bloomington, IN
I would be contacting my regulator and also getting a legal opinion. In my 30 + years I have never heard, until this thread came up, of a bank selling property on a "contract for deed". A bank is a creditor, the bank is extending credit to this person, at least I assume the written agreement is for more than 4 installments and charging interest on the transaction. By Reg Z definitions that is extending credit and is subject to all the Reg Z disclosure requirements including MDIA, HPML, HOEPA, ARMs, etc.
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#1242387 - 08/31/09 09:04 PM Re: Contract for Deed/former OREO Dan Persfull
Tesla Offline
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Thanks. The Agreement is at 0% interest. I am guessing that is a problem too. I am trying to find Appendix A to see if that is ok.

Just for giggles, I thought I would share what I was told when I started asking about this "what does Compliance care? It's a safety and soundness issue and it's off the bank's books now!" I love my job! I love my job! I love my job! cry

P.S. CFO confirmed it is not off the books. Whew!
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#1242464 - 09/01/09 04:40 AM Re: Contract for Deed/former OREO Tesla
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
But it is still payable by written agreement in more than 4 installments.

226.2

  (17) Creditor means: (i) A person (A) who regularly extends consumer credit that is subject to a finance charge or is payable by written agreement in more than 4 installments (not including a downpayment), and (B) to whom the obligation is initially payable, either on the face of the note or contract, or by agreement when there is no note or contract.
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