Portfolio Loan

By Edith Lank

February 10, 2019 5 min read

Dear Edith: We have been working with a real estate agent for some time, and he says we qualify for a mortgage. We have fallen in love with a house that's more than 125 years old and has a very great backyard. Our agent says whoever buys it will have to pay all cash because it won't meet the standards for a regular mortgage loan and the owners need to get their money out right away.

We have a pretty good down payment and good credit but no place else to borrow money, so we need to get a mortgage. Can you think of any way we could buy this house? — R. and J. W.

Answer: The first thing that comes to mind in a situation like yours is for the sellers to offer to lend the money themselves — accepting a down payment and then holding a mortgage. They'd collect the rest of the sale price — with interest — over the years. Evidently, this isn't possible in their particular situation.

I suppose, though, there's no harm in trying, particularly if the house has been on the market for a discouragingly long time. You could always sign a written offer that just might tempt the owners to change their minds. It would help if you were to promise as large a down payment as you can manage.

Alternatively, are you familiar with the term "portfolio loan"?

If you got a standard mortgage loan — let's say, for instance, a Federal Housing Administration mortgage — your lender would most likely bundle that asset up with a lot of similar loans and sell the whole thing on what is known as the secondary mortgage market.

You don't need to know how that works. Just take my word for it that there are institutions that invest in mortgage debts. Meanwhile your local bank, or whoever it was, gets its money back and can lend it out again. It might still handle your monthly payments, even though you now owe the debt to, say, the Federal National Mortgage Association (Fannie Mae), or perhaps to Freddie Mac.

Occasionally, though, some local lenders invest their own money in mortgages and then keep the loans in their own portfolios. And — this is the part that is good news for you — they can hold mortgages on any sort of real estate they want, in any condition. Sometimes, for instance, portfolio mortgages are used for jumbo loans, ones larger than Freddie or Fannie will buy.

Find out which lenders are currently making these portfolio non-conforming loans. Your real estate agent should be able to help with the research. You may want to contact a mortgage broker (different from a mortgage banker) who is familiar with the market. And if there's a local organization for antique homeowners, you might see what advice it has.

Ask a Priest

Dear Edith: You once printed a letter from a woman who had bought a house not knowing that the previous owner had committed suicide in the master bedroom. She said the owner should have told her, and that she was upset and wanted to cancel the sale. You said different states have different rules about what has to be disclosed about "stigmatized" property.

If I were this lady, I would go to the nearest Catholic Church (she doesn't have to be a Catholic), explain the situation to a priest and ask him to come down to bless the house. There's usually no charge for it, and she will feel much more comfortable staying there.

It would be very brief, probably less than five minutes, but the priest's blessing would remove any possible evil influence, and he would also pray for the man who killed himself.

Even if the owners don't understand how the blessing of a priest could help, she should try it. And it's a lot cheaper than going to a lawyer. — G. B.

Answer: Thanks for the suggestion.

Losing House

Dear Edith: I was manipulated out of my home by a man I trusted. He had me do a quitclaim deed for my property without knowing my name would not be on the deed. Now my home is up for sale, and he wants me out. Please reply as soon as possible. How can I save my home? — E.

Answer: You get this week's "see a lawyer" advice, and you should do it promptly. I wish you good luck.

Contact Edith Lank at www.askedith.com, at [email protected] or at 240 Hemingway Drive, Rochester NY 14620.

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