Comments on: Can “Equity Sharing” Prevent Foreclosures? http://www.ourbroker.com/foreclosures/can-equity-sharing-prevent-foreclosures/ Consumer Real Estate Information Since 1996 Tue, 07 Feb 2012 14:05:36 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Dave Salcido http://www.ourbroker.com/foreclosures/can-equity-sharing-prevent-foreclosures/comment-page-1/#comment-11204 Dave Salcido Tue, 13 Dec 2011 23:54:19 +0000 http://www.ourbroker.com/?p=4608#comment-11204 "There’s a catch here, however, which now dooms both Cuban’s idea as well as any similar approach to bail-out distressed borrowers. Equity-sharing has traditionally been designed as a way to acquire property, not as a way to refinance. Selling an equity interest in a home with an existing owner, changing the title, sets off the “acceleration” clause found in virtually all mortgages." Here's the fix. Don't sell an interest in the property. Sell an interest in a land trust (personalty, not realty). 1. Create a land trust (the homeowner must remain a beneficiary of the trust to avoid due on sale). This is for asset management, tax purposes, avoidance of probate, etc. Because of Garn/St. Germaine Act, putting your property into a trust does not trigger due on sale. 2. Deed title to a 3rd party corporate trustee. The trust is still beneficiary directed. 3. Assign a beneficiary interest (in the trust) to the lender. 4. sell the property for a profit and split the proceeds according to % of interest. Done deal. Everyone wins. “There’s a catch here, however, which now dooms both Cuban’s idea as well as any similar approach to bail-out distressed borrowers. Equity-sharing has traditionally been designed as a way to acquire property, not as a way to refinance. Selling an equity interest in a home with an existing owner, changing the title, sets off the “acceleration” clause found in virtually all mortgages.”

Here’s the fix. Don’t sell an interest in the property. Sell an interest in a land trust (personalty, not realty).

1. Create a land trust (the homeowner must remain a beneficiary of the trust to avoid due on sale). This is for asset management, tax purposes, avoidance of probate, etc. Because of Garn/St. Germaine Act, putting your property into a trust does not trigger due on sale.
2. Deed title to a 3rd party corporate trustee. The trust is still beneficiary directed.
3. Assign a beneficiary interest (in the trust) to the lender.
4. sell the property for a profit and split the proceeds according to % of interest.

Done deal. Everyone wins.

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