{"id":139,"date":"2009-12-19T10:23:20","date_gmt":"2009-12-19T17:23:20","guid":{"rendered":"http:\/\/privatemoneysource.com\/blog\/?p=139"},"modified":"2009-12-19T10:23:20","modified_gmt":"2009-12-19T17:23:20","slug":"trust-deed-lending-ten-mistakes-you-should-never-make-and-ten-mistakes-you-must-never-make","status":"publish","type":"post","link":"https:\/\/privatemoneysource.com\/blog\/?p=139","title":{"rendered":"Trust deed lending – ten mistakes you should never make and ten mistakes you must never make"},"content":{"rendered":"

Clay Sparkman<\/em><\/p>\n

Okay, first the ten mistakes you should never make:<\/p>\n

(1)\u00a0\u00a0\u00a0 Never close a loan without title insurance.<\/p>\n

(2)\u00a0\u00a0\u00a0 Never close a loan on property that has valuable structures without a valid hazard insurance policy in effect listing you or your entity as loss payee.<\/p>\n

(3)\u00a0\u00a0\u00a0 Never close a loan leaving property taxes unpaid (unless you are fully aware of the amount of unpaid property taxes and have knowingly agreed to allow some amount to remain unpaid for a certain specified period of time).<\/p>\n

(4)\u00a0\u00a0\u00a0 Never lend on land which may have wetland issues without seeing a wetland study or speaking with a relevant government official, and understanding the potential impact of possible mitigation requirements.<\/p>\n

(5)\u00a0\u00a0\u00a0 Never lend on property for which labor and\/or materials have been provided within 90 days prior to closing without either (a) having an extended ALTA policy of title insurance with no exception for labor and materials liens (difficult to get), or (b) having received a signed affidavit from the borrower which lists all providers used (along with contact info and the amount of any outstanding debt), and contacting all labor and materials providers on the list to make sure that none is preparing to file labor or materials liens.<\/p>\n

(6)\u00a0\u00a0\u00a0 Never close a loan secured by property which appears to show (by inspection, general observation, public record, or known history) a reasonable possibility of being contaminated by any form of hazardous waste, unless you have seen a current level I or level II environmental study showing the property to be clean.\u00a0 And in any event, always require borrowers to sign a hazardous waste indemnity agreement.<\/p>\n

(7)\u00a0\u00a0\u00a0 On a construction, rehab, or development loan: never disburse funds for work that has not been completed (unless as a deposit to a company that has been carefully checked out and is considered to be highly credible) and never disburse funds directly to the borrower unless as reimbursement for work that has already been completed and paid for, and which is documented accordingly.<\/p>\n

(8)\u00a0\u00a0\u00a0 On a construction, rehab, or development loan: whenever advancing funds to a labor, service, or material provider, never advance such sums without first requiring the provider or entity to sign a form acknowledging that the money is an advance and that the advance was provided by the lender or otherwise a third party, and that any refund must go back to the lender or third party and never<\/em> back to the borrower directly.<\/p>\n

(9)\u00a0\u00a0\u00a0 \u00a0Never close a loan without reviewing every single exception allowed on title in positions superior to your own.<\/p>\n

(10) Never close a raw land loan without first understanding precisely what is allowed by the applicable zoning and without speaking to appropriate government authorities to be sure that there are no known problems which may obstruct or deter any reasonable plans to develop the property.<\/p>\n

Okay, now for the ten things that you really absolutely must never ever do:<\/p>\n

(1)\u00a0\u00a0\u00a0 You must never close a loan at a title company known as Joe\u2019s First National Title located in a former burrito cart at the corner of 3rd<\/sup> and Main in Springfield.<\/p>\n

(2)\u00a0\u00a0\u00a0 You must never lend money on a property if you happen to catch your loan broker or borrower walking the property with a Geiger counter.<\/p>\n

(3)\u00a0\u00a0\u00a0 You must never lend money on a property in a country (or region) presided over by anyone named Hugo Chavez, Fidel (or Ram\u00f3n) Castro, Kim Jong-Il, Jim Jones, Iddi Amin, Papa Doc, Baby Doc, or well \u2026 any Doc for that matter.<\/p>\n

(4)\u00a0\u00a0\u00a0 You must never make a loan secured by documents which are written in iambic pentameter verse.\u00a0 Just back out the door, turn, and run as fast as you can.<\/p>\n

(5)\u00a0\u00a0\u00a0 You must never lend money to a non-human primate\u2014except possibly a rhesus monkey (and then only if the monkey is a natural born US citizen).<\/p>\n

(6)\u00a0\u00a0\u00a0 You must never lend money on a property if when you ask about inspecting the property, the broker intones, \u201cYou can\u2019t get there from here.\u201d<\/p>\n

(7)\u00a0\u00a0\u00a0 You must never lend money on a property if the appraisal states that the property’s highest and best use is \u201cancient burial ground.\u201d<\/p>\n

(8)\u00a0\u00a0\u00a0 Four words: tar pit never ever!<\/p>\n

(9)\u00a0\u00a0\u00a0 You must never make a loan where your trust deed will be in the thirty-seventh position.\u00a0 Ah, ah, ah \u2026 don\u2019t even think about it.\u00a0 (I don\u2019t care how good the CLTV is.)<\/p>\n

(10) You must never lend on property which straddles the international dateline.\u00a0 It is quite simply too confusing.<\/p>\n

Okay, so hopefully it was clear to many of you that the first set of items was meant to be serious and that the second set was intended to make you laugh.\u00a0 If not, don\u2019t worry about it.\u00a0 These are really all things that you shouldn\u2019t do\u2014funny or not.<\/p>\n

Now, I am good at telling people what not to do, so if anyone asks, I\u2019ll gladly crank out another ten not-to-do items (the serious ones that is) or if you would like for me to expand on any particular item on the first list, I will give that a shot as well.\u00a0 Any comment would be good actually.\u00a0 Hecklers are particularly welcome.\u00a0 (So far, we have been a little light on conversation, so I still get excited about the daily spam that trickles in.\u00a0 And yet not one to be easily discouraged, I take your silence as a kind of mesmerized reverence.\u00a0 What else could it be?\u00a0 Yes, that’s it.\u00a0 Very good.\u00a0 Now: at ease my good readers … at ease.)<\/p>\n

— Clay (clay@privatemoneysource.com)<\/p>\n","protected":false},"excerpt":{"rendered":"

Clay Sparkman Okay, first the ten mistakes you should never make: (1)\u00a0\u00a0\u00a0 Never close a loan without title insurance. (2)\u00a0\u00a0\u00a0 Never close a loan on property that has valuable structures without a valid hazard insurance policy in effect listing you or your entity as loss payee. (3)\u00a0\u00a0\u00a0 Never close a loan leaving property taxes unpaid […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_s2mail":""},"categories":[19],"tags":[40,41,42,49,50,51,58,59,60],"_links":{"self":[{"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/139"}],"collection":[{"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=139"}],"version-history":[{"count":0,"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/139\/revisions"}],"wp:attachment":[{"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=139"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=139"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=139"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}