re: Wraparound Mortgages

That's the legal language of a due on sale clause.

The reality is, as long as the bank keeps getting their monthly payment, the odds are, they won't care where it's coming from. This is especially true if the payments are coming from you directly.

Now, if you have an escrow account, and the escrow officer sees a tax bill or something with someone else's name on it... that could present a problem.

However, if the mortgage is performing, again, why would a bank want to do something that is going to mess with that? Foreclosures are expensive and messy and if they push the due on sale clause, that is where they are going to end up.

The only way I could see them getting really upset is, if somehow, their first lien got bumped.

That's not to say this is a good idea, or, that you will never have an issue with it. But it does explain why the other guy has done it before and not had any issue.

By the way, why doesn't the other guy just get traditional financing? Owner financing is used when someone can't get traditional financing, and there is a premium (unless it's a related party deal, which is completely different).