Is This Kinky Loan for You?

By
Real Estate Agent with Excellence in Real Estate Tm @ Allison James Estates & Homes

Is This Kinky Loan for You?
by John Occhi REALTOR
Realtor Consultant to Foreclosure Investors

I was reviewing some of my previous writings on other sources whan I came across this article on a very kinky loan program that I had written about last December, Just when we thought we saw the Kinkiest of Loans....

Jeremiah Miller, President of Mortgage Payment Deferral, Inc. has announced a patent pending program that will allow homeowners the ability to defer their mortgage payment for a full year - that's right defer your mortgage payment for a full year! He says that it will work with ANY type of mortgage. The program has 2 names that it will be marketed under - first for those who prefer the English language, there is the "12 Month Deferral" if you prefer to sound cool and quote jargon then you're in luck because the program is also known as the "12MoDef".

According to the website, there are now 6 mortgage companies writing these loans and the process for a mortgage broker to get involved can be found on the website.

Miller says, "I was inspired to create 12MoDef with the idea that a year without mortgage payments could give someone financial freedom and stability for a better future." He goes on to say, "Everyone has their own reason for using 12MoDef. Many of our clients are making job changes, starting families or struggling with a new business venture; while some are being crushed by meeting the monthly financial burden of their mortgage payment AND credit card debt. A year without the stress of a mortgage payment allows people to reassess their financial situation and regain control of their life again."

The idea took three years to bring to fruition. Needless to say, he found his share of naysayer's. He is quoted as saying, "During our initial research and development of the product, we were informed by many banks, lawyers and title companies that the idea was impossible and we were basically wasting our time. We refused to believe it and fortunately we refused to give up. Now, all of our hard work and dedication have paid off with the inception of this truly wonderful product. Without a doubt this has been the most rewarding endeavor in my entire career."

The program acts by creating a trust with some of the equity you have in your home. The money in the trust account is invested and earns an ‘aggressive' interest. The program guarantees that the trustee will make each payment, on time, every month - to the correct lender.

I'm not sure, but my guess is if you enroll in this program, then you'll be able to include 2nd and even 3rd mortgages - assuming you have the equity.

What brought me back to this article is the work I am doing with pre-foreclosure homeowners. If they have any equity, this might just be a great way for them to salvage their home and at least get it ready for a reasonable sale - again assuming they have the equity.

The one limitation I see is that the program only works with fixed rate loans - as they have to know how much money goes into the trust. If the payment were to escalate - then they can't predict. So, if the loan payment is fixed for a sold year, then the max this loan program could be implemented for would be the 12 months of fixed payments.

Each month the homeowner then receives a monthly statement showing the balance of the trust as well as all activity on the actual mortgage. At the end of the 12 month period, the trust simply closes and all remaining funds, including the earned interest, are returned directly to the homeowner.

Although the program is know as a 12 month program, it is actually available for any time period spanning 3 to 36 months.

I am not endorsing this product, so I won't be telling you where to sign up. What I do know is that the company is aggressively looking for brokers and lenders to market the program.

Hoping to make your California Real Estate Investment...
A Pleasant and Profitable Experience,

John Occhi, Hemet CA REALTOR

Posted by

Until Next Time, Have a Blessed Day,

John Occhi, ePRO & Five Star Certified REO REALTOR®
www.JohnOcchi.Com
Hemet - San Jacinto Valley, CA
The Excellence in Real Estate Team @
Allison James Estates & Homes
2281 W. Esplande Ave, #102-B
Next to "Starbucks"
San Jacinto CA 92582
(951) 654-5550

Excellence in Real Estate,Team Log,John Occhi,www.johnocchi.com,hemet,san jacinto,CA

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This blog and the contents written here is the intellectual property of John Occhi, San Jacinto Valley REALTOR® in the South West Riverside County region of the Inland Empire of Southern California.  The views and opinions expressed are just that - views and opinions of John Occhi and those who comment.  Please note that I am not an attorney or a tax professional and any time I discuss either topic, I suggest you consult with the proper professional for relevant assistance.

This blog is part of the ActiveRain Real Estate Network, which is a social network highlighting the best of Web 2.0.  Information is provided with the intent of educating and assisting home owners, home sellers, home buyers and real estate investors with information the can be used to make better real estate decisions.

I am proud to be a full time REALTOR® who is proud to be a contributing member of the ActiveRain community.

Comments (6)

Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time
I have heard of this and it does sound like there would be a place for it in the market. Thanks for bringing this up John, I now have some more studying to do . Thanks!!!!!!
Jul 15, 2007 12:46 PM
John Occhi
Excellence in Real Estate Tm @ Allison James Estates & Homes - San Jacinto, CA
ePRO, Five Star Certified, Riverside Cnty REO Expert, 951.443.6259

 Bryant Tutas - Thanks again for stopping buy and offering your comments.  I wold like very much to know what you learn.  I too will be making a couple of calls - I may even have a customer for this loan.

John Occhi, Hemet CA REALTOR
Mission Grove Realty

Jul 15, 2007 06:10 PM
John Occhi
Excellence in Real Estate Tm @ Allison James Estates & Homes - San Jacinto, CA
ePRO, Five Star Certified, Riverside Cnty REO Expert, 951.443.6259

I was offered a suggestion that a better and safer way to handle this would be for the home owner to simply take out a heloc for approximately 15 to 30 times his monthly mortgage payment, invest it in somrthing that they feel comfortable with. make their mortgage payments out of the payments they receive each month. This could theoretically go on for several years.

Hoping to make your California Real Estate Investment...
A Pleasant and Profitable Experience,

John Occhi, Hemet CA REALTOR 
Realtor Consultant to Foreclosure Investors
Mission Grove Realty

Aug 19, 2007 06:24 AM
David Saks
(retired) - Memphis, TN
I'd like to discover more and hear about risks that may be associated with the progam. Seems that any financing arrangement that relies on investing equity would have some potential probability of being exposed to peril. On the other hand, if this is a venture undertaken without regard to possible loss or injury to the collateral or security pledged for the repayment of a loan there may be merits.
Mar 22, 2008 12:46 PM
Windy Hixson
MOVE HOME REALTY - Riverside, CA
Riverside Ca~h2o Homes Specialist

 

  John: I heard a loan rep talk about this special loan on a radio show about 2 months ago. As a

consumer without knowing any of the negatives it may offer I would sign up myself. However, being somewhat in the industry (I don't do loans,only real estate) I am waiting for more info. Besides anything with the word kinky sounds interesting. (only kidding) 

Mar 22, 2008 07:10 PM
Ethan Dozeman
Realty Executives Platinum Group - Grand Rapids, MI
Real Estate in Grand Rapids
so I wonder if that would work for a foreclosure deal.  Say I found a house I could buy for $250,000 that last year was for sale for $450,000.  Could I put into trus say $100,000 to make payments for 3 years on the home, that would give me time to sell my current residence.  Quite a concept...
Mar 23, 2008 12:50 PM

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