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I'm Looking To Get One Loan To Cover Multiple Rental Properties. Are There Lenders Who Do This?

Q: Are there lenders who would originate one loan to replace five or 10 current mortgages that I have on singlefamily investment properties? I think this would be easier and more manageable from a cash-flow standpoint.

A: Yes. A "blanket" mortgage is a single loan secured by two or more properties. However, I would suggest that you're better off with multiple mortgages. Here's why.

Imagine that you have 10 single-family rental properties that secure a single blanket mortgage. The good news is that you have one monthly mortgage payment. Now skip ahead three years. You decide to sell or refinance one property - whoops! You cannot sell or refinance a single property without a release from the lender because all 10 properties secure the loan. Without a release, all properties must be refinanced. Since the loan is big - it does cover 10 properties - it may not be easy or cheap to refinance.

As to cash flow, it makes no difference whether you have one loan or a dozen. What counts are the rates and terms for each loan and, thus, total monthly costs.

Q: We have been looking at the purchase of rural land outside a major metro area. Are there brokers who specialize in raw land?

A: Raw-land sales and purchases can be complex transactions, so it's good to use experienced brokers. Among the more than 2 million real estate licensees, a relatively small number specialize in raw land and hold the "accredited land consultant" designation. To qualify, individuals must have at least 120 educational credits, $5 million in land sales and at least 25 separate sales. To find ALCs in your area, go to: www.rliland.com.

Q: Our son is living in a Las Vegas home that we own. He is going to be taking over the payments, and we would like to get the deed transferred into his name with minimum expense. Can we do this with our current financing?

A: Usually when there's a title change, the lender has the right to immediately call the loan. However, under the Garn- St. Germain Act, this right is restricted in a small number of instances. One of those instances where a lender cannot instantly activate a due-on-sale clause concerns "a transfer where the spouse or children of the borrower become an owner of the property."

However, before going further with this there are other issues to consider. If you transfer title are you making a gift? You bet - and where there are large gifts, there are tax and estate implications to consider.

Rather than transferring ownership entirely to your son, you may want to give him a certain equity interest each year until he has full title to property.

Go no further with this until you have spoken with a tax professional and a Nevada real estate attorney. Also, make certain that you and your son have wills and living wills.

Q: I recently had a short sale. The second mortgage holder agreed to settle for less than the amount owed. However, they had me to sign a loan-modification document that says they agree to accept less money for the sale of the home if I agree to still owe them money after the property is sold.

The closing documents show them settling for a flat amount but made no mention of me owing additional money. What happened here?

A: With a short sale, a home is sold for less than the value of the mortgage and the lender agrees to take a loss. But if

you think about it, why should the lender lose money? If the value of the property increased, would you cut the lender in for some of the additional profit?

What some lenders - and maybe an increasing number of lenders - are now doing is agreeing to a short sale but only if the borrower will pay off the loss over time with a personal note.

It is likely in a foreclosure that most or all of the value of a second mortgage will be lost. The second mortgage lender in this case is making the best of a bad situation by obligating you to repay their loss in the form of a personal loan. For purposes of closing, their loan is being retired. Outside of closing, you have agreed to repay some or all of the debt.

You need to speak with an attorney to determine what obligation you now have. Also, is any unpaid debt being reported to the IRS as "imputed income" - money that you did not actually receive in cash but can be taxed? © CTW Features

Need real estate advice? Peter G. Miller, author of "The Common Sense Mortgage," would love to hear from you. Send your questions to peter@ctwfeatures.com. Due to the high volume of letters, not all questions can be answered.