Anyone using Blanket Loans? Make them?

[Elrod]

I want to investigate using them before I pay expenses for originating 3 separate mortgage on rental SFHs.

[Elrod]

Thanks!

[AIR]

I am interested in this topic as well, I know what they are but other then that not too much... I am also interested in discussing open-end loans

[The GUY]

Not the most prominent mortgage tool in the market place on the "street" anyway but it is used often. Most originations will come from a local bank, institutional investor or a hard money lender. I don't believe that many residential mortgage brokers are too experienced in these products.

The mortgage itself is fairly straight forward. 1 lien is recorded against a group of units. Every unit is still an individual unit just bulked up under the lien, so all things normal would apply. The liens are recorded separately on each unit. Some of the guys I know will only do an investor on non-contiguous property to limit their risk to an extent. Non-contiguous for the record are parcels that are not touching. So you may not be able to buy a block of condos or units in the same sub-division. Again that will depend on your particular lender/investor.

A typical blanket mortgage is applied to a developer of contiguous property whereby the developer has to develop and sell each lot/unit individually (Used frequently in sub-divisions, PUDS and Condo developments. One mortgage is taken out to lien the entire parcel or development and then as each lot/unit is developed and sold. As the developer sells these lots/units the unit is "released"/conveyed under a clause in the mortgage called partial release. This clause will outline how and why a lien can be release from the total mortgage and how the debt of that lien has to be paid to release the lot/unit. This has to be done to transfer clear and marketable title. Most times their exists a Forward Commitment of monies derived from the sale to benefit the lender/investor. Basically you pay the lien's principle and interest before too much money goes in your pocket as the developer.

If you can pull it off these transactions will save a couple bucks on title insurance and fees opposed to doing each unit individually. You will more than likely be in the commercial department of the bank/lender/investor when applying for this loan.

hope that helps