Legal Question in Real Estate Law in California

Re: Real estate mortgage

You are always at risk if you are in a position of someone owing you money. What is the reason given for the buyer not getting a commercial loan? At the low LTV numbers you are talking about, they should readily qualify for a traditional mortgage. You need to do a thorough loan application and have the broker provide all of the information they would be required to provide if they were seeking a loan from a traditional lender. Some people seek seller-financing because it is "easier" than getting a traditional loan. Others do it because they simply cannot get a traditional loan. If they fall into the later camp, then you may not want to take the risk. Bankruptcy is not going to change the priority of your loan, unless the law changes and congress allows bankruptcy courts to modify loans on primary residences. Also, you should only consider making this loan if they intend to occupy the home (really are going to occupy the home) as their primary residence. I would not lend to a speculator or investor at this point, again unless they can pass the underwriting criteria necessary to get a traditional mortgage. Your realtor should be able to help you with what those criteria are, or you can contact a local real estate attorney.

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