Would you sign this? READ YOUR DOCUMNETS


#1

I was just given some closing docs on a loan for a park I am buying. What would you do if you got this buried in 94 pages of paperwork?

Borrower authorizes Lender, from time to time to: (a) to alter, compromise, renew, extend, accelerate, or otherwise change one or more times, the time for payment or other terms of the Guaranteed Obligations or ANY PART of the Guaranteed Obligations, including increases and decreases of the rate of interest on the Guaranteed Obligations.

WHAT IS THE USE OF HAVING A NOTE WITH SPECIFIC RATES AND TERMS IF THEY CAN CHANGE IT WHENEVER THEY WANT?

OR ANOTHER PARAGRAPH.

4.11LEASES: Borrower shall (a) submit the Leases to Lender for approval prior to the execution thereof, and provide such information as Lender may require to determine the creditworthiness of any proposed tenant; (b) except for security or similar deposits, borrower shall not collect any rents under any of the Leases more than one month in advance of the time when such rent becomes due.

SO THE LENDER WANTS TO NOT ONLY APROVE EVERY TENANT, BUT THEY WONT LET ME COLLECT ADVANCED RENT IF A TENANT WANTS TO PAY TOO? AND IT GETS BETTER IF I DO COLLECT MORE THEN ONE MONTHS RENT I AM IN DEFAULT AND THEY CAN CALL THE NOTE DUE AND PAYABLE IMEDIATLY WITHOUT NOTICE. OR IF A TENANT DOES ANYTHING ILLEGAL THEY CAN CALL THE NOTE DUE, THE LIST GOES ON AND ON…

If anyone wants to see the other 94 pages they are full of laughs…These are just two paragraphs out of dozens… so I ask again - what would you do? (PLEASE RESPOND) I would like some feedback from some fellow investors to show to the bank.


#2

that is crazy, is that loan through a bank or a broker? it is astounding to see the amount of people that never read loan docs, i have always felt the devil is in the details. a lesson to all other investors READ READ READ!


#3

What is your Plan B if you do not accept this loan?

The part about the change of terms scares me but the part about them approving your leases or how you collect rent doesn’t worry me. Lenders have a hard enough maintaining sufficient staffing levels just to get docs out the door and attempt to properly collect and record your payments. Finding time and people to review your leases and other items is, to me, unlikely. However, such a clause could hurt if ever you are late with a payment and the lender doesn’t want you as a borrower anymore.


#4

Eli,

Are you out any fees from this lender?

Keep in mind there is alot of lenders out there chasing deals, ifthese guys strung you along let us know who they are so we dont deal with them in the future!

For others out there, how many pages generall are lender docs for a MHP?


#5

Eli:

A typical MHP note will be from 6 to 10 pages and will have 12 to 20 paragraphs detailing requirements and consequences. For future purchases you could ask in advance for a copy of the lenders note for review at time of application and run it through your realestate attorney.

If you need financing in the future please consider using the “Finance Guy” at One Stop Financial where “one call does it all”.

Your for successful Financing,

Don Wilson (OK)


#6

I know what you mean about a normal note. You should hear the bank rant and rave about how their paperwork is “Standard.” It is actually quite humerous hearing them go on and on about how standard it is when anyone of us that has ever done this knows that it is NOT standard to: (all of this is really in there, it is no joke - though it is quite humerous)

  1. They are making me AND my lawyer sign off on the fact that I give up EACH AND EVERY right I have, including any and all rights that I have if they (the bank) are fraudulent or deceptive. and further they make me waive any and all consumer rights that are there to protect me if they do take advantage. hummm I wonder what their plans are… ( it gets better keep reading).

  2. The security agreememtn states that I CANT SELL THE PROPERTY

  3. I cant even put the property on the market!

  4. Up to once a year they can demand an apraisal on the property ($3,000 - $7,000) and I have to pay for it.

  5. They can call the note due at any time, for any reason, WITHOUT notice. (I ask myself what is the use of a 5 year fixed rate if they can change that rate at any time, or call it due at any time - that doesnt sound fixed to me…)

This is what my attorney wrote to me:


#7

Kali

I know there are a lot of lenders out there, I know that well… the reason I did choose this company is I was impressed with them when I met them. They understand the business and I wanted a WORKING RELATIONSHIP with them. I hoped that because they know this business so well I could get to a point where I could send them a deal and we could get it funded fairly easily. I have a few relationships with people where I can call up and get a couple hundred thousand dollars fairly easily. with one of them I dont even need paperwork because we trust each other. I didnt expect to get something that good from this lender, but I figured we could get a win win relationship of trust going. If their docs for the first loan are 90 plus pages. Even if we did get a good relationship going what are they goign to be 50 pages?

Kali, at this time i am not going to say who this lender is. I need to talk to them still and figure out what is going on here. I think that their attorney just went a bit crazy cutting and pasting every provision know to man in the contract and now he is just saying it is “standard.” I still think that the company is full of good people and I hope I am right. But if I am not, I will disclose who it is to help save others from this agrivation.

How big are “standard” lenders docs. First of all you need to realize that “standard” is not standard. there is no such thing. The closest thing to standard is the docs approved by the board of realators in any particular state, but even that is not standard. Standard is a term used to give credibility to whatever doc you might have in an attempt to convince another that it is boilerplate and unchangable. If there was such a thing as standard then they would ALL be the same and i have NEVER seen 2 that are the same, that being said I would say that the normal size of docs are anywhere in the 10-30 page range, with the average about 15 total pages. most of them that I have signed have been in the 10-15 page range.


#8

No, I wouldn’t accept this document, Eli. Actually I accept very few documents I am asked to sign, especially those given to me by doctors & hospitals. I recommend you do as I do in those cases, which is to cross out & initial any objectional sections & to add any relevant wording that protects me. For example, I always add a clause that no medical care or tests are to be provided w/out PRIOR written approval. That saved me 2k @ Duke.

I haven’t seen your document, but from what you’ve said, my guess is that is onerous, & that simple additions/deletions might not make the document work. An alternative might be an addendum, written by your attorney & signed by all parties that grants you back your rights.

The letter from your attny should go a long way w/the bank. I’d just hand-carry it in to the powers that be (& I’m guessing that you & I both know the powers that be @ this institution, & based on the experiences of others, they still have a lot of kinks to work out before their system is up & running smoothly) & say, “Folks, how can we work this out so that my attny w/let me do this deal?” Make your lawyer the higher authority & you the accomodating guy.

If it would help, I’d be happy to look @ any of your paperwork & provide comments on my letterhead. Call or e-mail me if you have any questions or if I can assist in any way–

Tye


#9

So the attorney for this bank emailed me today and wants utility capacity letters proving that the tenants in this park have utilities. I mean really… how rediculous can they be? Do they think that people will live in these nice homes with no electricity, no water or no sewer? Give me a break!

It is laughable and at least I can now laugh about it.


#10

utility capacity

I think they mean they want to make sure you have enough Electric, water permits for each trailer. I have seen plenty of parks with illegal sites.


#11

Eli,

You have now gone a step beyond what we had to do…I thought their process was supposed to get easier after the one we did. Apparently not.