We don't know if our house payments are being made

[baroness]

We just (Nov 2009) bought the house we'd been renting for a couple years, from the owners, seller-financed. I was a little nervous about this method but neither DH nor I have been able to get bank accounts lately, let alone home loans. We wanted to buy so we can save money over renting, add on to the (tiny!) house in a couple of year, and get in on the homebuyers' tax credit.

They live in Louisiana, we are in Iowa...initially the owner of the management company they use for their properties in this area was our go-between for negotiating the terms and getting paperwork to us. Everything went pretty smoothly, we looked over the contract w/a lawyer, we filed our papers at the courthouse, etc. Now that we've closed on it, obviously we are on our own to work out any issues with the owners.

Well, the terms are that we pay them x amt and they forward it on to their bank, Wells Fargo, as well as the taxes. Since we won't get a traditional mortgage statment that way, we initially went to our WF and tried to make our pmts there but were told we can't do it without knowing their account number...and when we asked the owners about this they said they aren't comfortable giving that to us. So okay fine, we have sent the December and January pmts off to Louisiana, both times with a polite request for a receipt. They have not been sent. We have called 3 or 4 times and been told it is in the mail and they had "lost their receipt book, sorry", the last time being over a week ago. We did at least get a receipt for the down pmt--it was scrawled on a scrap of paper, not exactly professional, but at least we'd have something for court.

DH is very cynical and convinced they are making off with our money. He could be right. At the very least they are extremely unprofessional and we are very vulnerable. But with them being in LA, I don't know what we can do. BTW we don't have the lawyer anymore (long story).

[mowse]

i would send all payments via certified mail, return receipt requested. with copies made of the check, the envelope, etc. Make sure it is documented that you are making the payments. and get the copies of the canceled checks and keep those all together. That may be as close as you get to a receipt from them.

[baroness]

i would send all payments via certified mail, return receipt requested. with copies made of the check, the envelope, etc. Make sure it is documented that you are making the payments. and get the copies of the canceled checks and keep those all together. That may be as close as you get to a receipt from them.

Thanks, Micki, I'll pass this on to DH. We've been sending money orders because DH didn't want to pay for the checks to a get a checking acct. *sigh* He's gone through half a dozen banks since I've known him because he's very easily irritated. I'll tell him we'd be more protected with returned checks.

[Meagan]

We just (Nov 2009) bought the house we'd been renting for a couple years, from the owners, seller-financed. I was a little nervous about this method but neither DH nor I have been able to get bank accounts lately, let alone home loans. We wanted to buy so we can save money over renting, add on to the (tiny!) house in a couple of year, and get in on the homebuyers' tax credit.

They live in Louisiana, we are in Iowa...initially the owner of the management company they use for their properties in this area was our go-between for negotiating the terms and getting paperwork to us. Everything went pretty smoothly, we looked over the contract w/a lawyer, we filed our papers at the courthouse, etc. Now that we've closed on it, obviously we are on our own to work out any issues with the owners.

Well, the terms are that we pay them x amt and they forward it on to their bank, Wells Fargo, as well as the taxes. Since we won't get a traditional mortgage statment that way, we initially went to our WF and tried to make our pmts there but were told we can't do it without knowing their account number...and when we asked the owners about this they said they aren't comfortable giving that to us. So okay fine, we have sent the December and January pmts off to Louisiana, both times with a polite request for a receipt. They have not been sent. We have called 3 or 4 times and been told it is in the mail and they had "lost their receipt book, sorry", the last time being over a week ago. We did at least get a receipt for the down pmt--it was scrawled on a scrap of paper, not exactly professional, but at least we'd have something for court.

DH is very cynical and convinced they are making off with our money. He could be right. At the very least they are extremely unprofessional and we are very vulnerable. But with them being in LA, I don't know what we can do. BTW we don't have the lawyer anymore (long story).

Problem is, even if the money orders/checks are cashed and you get a receipt, that's still no guarantee they're making the payment. I'm not sure what your laws are like there in Iowa, but I'd keep a close watch on county land records to make sure there is no foreclosure in process against the house at any time. Did you file your land contract with the county?

[baroness]

Problem is, even if the money orders/checks are cashed and you get a receipt, that's still no guarantee they're making the payment. I'm not sure what your laws are like there in Iowa, but I'd keep a close watch on county land records to make sure there is no foreclosure in process against the house at any time. Did you file your land contract with the county?

Yes, we did file with the county.

[jerzymama]

If it was me, I'd insist that they open a specific account with Wells Fargo just for your monthly mortgage payments - I'm envisioning some kind of escrow account. Then they could arrange an automatic deduction by Wells Fargo for the mortgage (and taxes & insurance if that's included with the mortgage - whatever the amount you pay). This sounds way too complicated and iffy for me. You have absolutely no way of knowing or being guaranteed that your payments are in fact being applied towards the mortgage.

Is Wells Fargo aware of this arrangement?

ETA: If they dont agree to this - I would talk to a lawyer; perhaps it would be in your best interest to open your own escrow account, until the details are worked out.




We just (Nov 2009) bought the house we'd been renting for a couple years, from the owners, seller-financed. I was a little nervous about this method but neither DH nor I have been able to get bank accounts lately, let alone home loans. We wanted to buy so we can save money over renting, add on to the (tiny!) house in a couple of year, and get in on the homebuyers' tax credit.

They live in Louisiana, we are in Iowa...initially the owner of the management company they use for their properties in this area was our go-between for negotiating the terms and getting paperwork to us. Everything went pretty smoothly, we looked over the contract w/a lawyer, we filed our papers at the courthouse, etc. Now that we've closed on it, obviously we are on our own to work out any issues with the owners.

Well, the terms are that we pay them x amt and they forward it on to their bank, Wells Fargo, as well as the taxes. Since we won't get a traditional mortgage statment that way, we initially went to our WF and tried to make our pmts there but were told we can't do it without knowing their account number...and when we asked the owners about this they said they aren't comfortable giving that to us. So okay fine, we have sent the December and January pmts off to Louisiana, both times with a polite request for a receipt. They have not been sent. We have called 3 or 4 times and been told it is in the mail and they had "lost their receipt book, sorry", the last time being over a week ago. We did at least get a receipt for the down pmt--it was scrawled on a scrap of paper, not exactly professional, but at least we'd have something for court.

DH is very cynical and convinced they are making off with our money. He could be right. At the very least they are extremely unprofessional and we are very vulnerable. But with them being in LA, I don't know what we can do. BTW we don't have the lawyer anymore (long story).

[baroness]

If it was me, I'd insist that they open a specific account with Wells Fargo just for your monthly mortgage payments - I'm envisioning some kind of escrow account. Then they could arrange an automatic deduction by Wells Fargo for the mortgage (and taxes & insurance if that's included with the mortgage - whatever the amount you pay). This sounds way too complicated and iffy for me. You have absolutely no way of knowing or being guaranteed that your payments are in fact being applied towards the mortgage.

Is Wells Fargo aware of this arrangement?

ETA: If they dont agree to this - I would talk to a lawyer; perhaps it would be in your best interest to open your own escrow account, until the details are worked out.

I never thought of this--it sounds like a great idea. I don't think Wells Fargo is really aware--we only talked to a teller the time we tried to pay it directly to the owners acct and no, I think as far as they know the original owners are still making the payments themselves.

DH is close to a panic state over this and talking about getting out of the whole deal and I'm trying to convince him to try to work something out. I don't know that we would be ABLE to back out of it anyway.

Edited to say: The owners just returned my phone call and said they are now sending receipts by email, and I did receive it. I don't even know if that's valid, though, without a real signature? And like you all have said, even with a receipt that doesn't ensure we keep our house. Geez, what a mess.

[Jewel2]

is that they file an interest statement so that you can get a mortgage interest deduction for interest paid. I think it is a 1098, but it might be another form for owner-financed property. Or can you at least make sure that for each payment you make, you record how much is interest and how much is principal?

They sound kind of flaky -- hand-written receipts? -- so you might also want to consider having a loan servicing company handle it all, or at least stop being polite. Any chance you can contact a lawyer or an accountant about setting up something more reliable -- otherwise, it sounds like you might be fighting with them every month, and also not getting the benefits of homeownership if they are flaky about their record-keeping. It will cost a bit of money but might be worth it in the long run, and maybe it is something simple that an accountant could do in a couple of hours. Good luck!


We just (Nov 2009) bought the house we'd been renting for a couple years, from the owners, seller-financed. I was a little nervous about this method but neither DH nor I have been able to get bank accounts lately, let alone home loans. We wanted to buy so we can save money over renting, add on to the (tiny!) house in a couple of year, and get in on the homebuyers' tax credit.

They live in Louisiana, we are in Iowa...initially the owner of the management company they use for their properties in this area was our go-between for negotiating the terms and getting paperwork to us. Everything went pretty smoothly, we looked over the contract w/a lawyer, we filed our papers at the courthouse, etc. Now that we've closed on it, obviously we are on our own to work out any issues with the owners.

Well, the terms are that we pay them x amt and they forward it on to their bank, Wells Fargo, as well as the taxes. Since we won't get a traditional mortgage statment that way, we initially went to our WF and tried to make our pmts there but were told we can't do it without knowing their account number...and when we asked the owners about this they said they aren't comfortable giving that to us. So okay fine, we have sent the December and January pmts off to Louisiana, both times with a polite request for a receipt. They have not been sent. We have called 3 or 4 times and been told it is in the mail and they had "lost their receipt book, sorry", the last time being over a week ago. We did at least get a receipt for the down pmt--it was scrawled on a scrap of paper, not exactly professional, but at least we'd have something for court.

DH is very cynical and convinced they are making off with our money. He could be right. At the very least they are extremely unprofessional and we are very vulnerable. But with them being in LA, I don't know what we can do. BTW we don't have the lawyer anymore (long story).

[Vicky]

I would go to Wells Fargo and ask to speak to the branch manager. This does NOT sound on the up and up. He will not be able to give you any account information, but he can tell you if this type of arrangement is something that would be sanctioned by Wells Fargo. I think it is likely that the previous owners have a non-assumable mortgage and are trying to pull a fast one on the bank. Whose name is on the deed? You won't be able to get the tax benefits from the mortgage interest payments if the mortgage is not in your name - the 1098 is issued in the name of the mortgage holder as they are the ones making the payments.

I don't really know how owner financing works if the previous owners have a mortgage still in their names. I don't see how you can get any benefit from home ownership in that circumstance.

[Meagan]

I would go to Wells Fargo and ask to speak to the branch manager. This does NOT sound on the up and up. He will not be able to give you any account information, but he can tell you if this type of arrangement is something that would be sanctioned by Wells Fargo. I think it is likely that the previous owners have a non-assumable mortgage and are trying to pull a fast one on the bank. Whose name is on the deed? You won't be able to get the tax benefits from the mortgage interest payments if the mortgage is not in your name - the 1098 is issued in the name of the mortgage holder as they are the ones making the payments.

I don't really know how owner financing works if the previous owners have a mortgage still in their names. I don't see how you can get any benefit from home ownership in that circumstance.

It's my understanding that the tax credit IS available to buyers purchasing on land contract.

The benefit as far as I see it is that it allows the buyer to get into the house and start paying down the principal until they're able to qualify for the mortgage themselves. Isn't this how a land contract usually works? You move in, the seller keeps the mortgage, effectively "financing" the purchase until the balloon payment is due? I was under the impression that this was totally legal--particularly since you can have it recorded with the county.

[Vicky]

We don't do land contracts at my bank so I am unfamiliar with them. It could be that everything is fine. Still, I would check with Wells Fargo to see if this is on the up and up. As I said, it would NOT be at my bank, even though it might be legal in my state.

[baroness]

It's my understanding that the tax credit IS available to buyers purchasing on land contract.

The benefit as far as I see it is that it allows the buyer to get into the house and start paying down the principal until they're able to qualify for the mortgage themselves. Isn't this how a land contract usually works? You move in, the seller keeps the mortgage, effectively "financing" the purchase until the balloon payment is due? I was under the impression that this was totally legal--particularly since you can have it recorded with the county.

Yes, exactly-- it is in our name, that was specified in the contract and it IS recorded with the county under DH's name. The balloon pmt is due in 5 yrs (only $35K house so we will be able to pay it off in 5 year w/minimal interest paid, but we don't want to DO the extra principal pmts until we sort this out).

We also talked to the IRS and it does qualify for the tax credit...in fact we've already filed an amendment to our 2008 return and are waiting for the check.

[Meagan]

We don't do land contracts at my bank so I am unfamiliar with them. It could be that everything is fine. Still, I would check with Wells Fargo to see if this is on the up and up. As I said, it would NOT be at my bank, even though it might be legal in my state.

Oh, I see. I guess I thought a bank would view it like a rent w/option to buy (since in essence that's what it is--I don't think you transfer the title until the mortgage is assumed). But maybe banks also don't like you to rent out a house that was purchased as a primary residence? I don't know.