Mortgage assumable? What is the catch?
My husband and I have been interested in buying a house. We recently relocated to this area and have taken our time to find a house we like. We found one but it says this:
Mortgage is assumable for qualified individuals, current mortgage is about 120K with 30 year fixed rate of 6.625%, loan via wells fargo native american lending dept. must be a member of any Native American tribe to qualify for assumption-requirements are NOT BASED ON CREDIT SCORE.
Any feedback is appreciated. (We are Native American, so I don’t think that is a problem). What does this mean?
Dimitry Orlov Presentation
Dimitry Orlov (at the podium) seen here with the host from The Long Now Foundation. His talk was called Best Practices for Collapse because, as he wryly pointed out, predictions are useless once they come true and he wants to offer something more useful from what others have already experienced. He opened his talk by cautioning that predictions, including his own should be given an error margin of half a decade or so, but so far he has been remarkably spot on.
Dimitry’s 2006 presentation on the collapse gap, in which he compares the demise of the USSR with what he predicted would be a similar collapse in the US, captured my imagination a couple of years ago and set me on my long study of the phenomena of civilizations collapsing. I had also read his book (and reviewed it). So I was thrilled to actually see Dimitry in person and introduce Catherine to his perspective.
Though not a charismatic speaker and reading from a prepared script, Dimitry peppered his talk with amusing concepts and references to popular notions ie: thinking outside of the box. He urged escaping from the box altogether.
Once collapse happens, he explained, what was the measure of our success before collapse is turned around post collapse. For instance having a high inventory is
considered bad business practice in this era of on demand supply, but after collapse, inventory is what will be needed once supply lines are down. And where once a lean staff was prudent, post collapse, a slow bureaucratic staff would save you. Customer service, now a mark of a good company, will turn out to have spoiled the population and rendered them unable to figure things out for themselves post collapse. He pointed out that all this economic activity was a burden on our ecology and what is crashing now is our life support system. So the governemnt should forget about stimulating it with growth and jobs and focus on food, shelter, transportation and security. He then proceeded to offer suggestions.
Food: Supermarkets will empty out in a matter of days, but fast food joints will be able to carry on a little longer given that they control their own supply lines, if you can call what they offer food. What we will need is for everyone to have access to 1,000 sq ft of fertile land near a water source with transportation for the seasonal migration needed for everyone to get out there to plant and to harvest. And as there will be fewer people driving, raised highways could be used for rainwater catchment.
Shelter: Office buildings, which will empty out post collapse, can be handily converted to dorms. They already have bathrooms and kitchens lacking only beds. He referred to the workers as office plankton which got a laugh. American colleges, are already a dubious endeavor given the burden of student loans. Post collapse few will be able to qualify, leaving campuses empty. This will provide us with housing opportunity. Said campuses already provided with lots of lawns, will also offer food growing opportunity. He slipped in a sly comment about how the American education system does not manage to do in 12 years what the Russians do in 8.
He commented on how the price of housing hangs on a huge assumption that a single family dwelling is required and it was still possible to see housing prices drop and become the liability of banks as they fight squatters. He suggested having the bank hire you to housesit and maintain these properties once they kick you out for not paying the mortgage owing to hyperinflation. He suggested that shelter can include mobile homes, teepees, shipping containers, etc.
Transportation: Since this sector hinges on fuel it’s best not to use any thus cargo bicycles and sailboats. He did think that there would still be cars and trucks and that it should be illegal not to pick up hitchikers. His suggestion that the sale of new cars be banned was met with applause as he described how this would use the embodied energy in cars already made, boost the locally based repair economy and result in fewer cars overall, disappearing altogether just as we run out of gas. There was no point in subsidizng the manufacture of more fuel efficient cars, he said, because you can make any existing pick-up truck ten to twenty times more efficient by packing 20 people standing up in the back and driving no faster than 25 mph. He mentioned that Mexico is already expert at this (and so is Thailand). Big laugh here. He also suggested that freight trains be required to have one empty boxcar for those wishing to ride the rails. But best of all were donkeys. Not horses—too neurotic. He told us about his uncle who fed his donkey his subscription of Pravda and commented that ours would do just as well on a daily diet of the Wall Street Journal. The audience loved that one.
Security: Here the going gets a bit nastier for there will be an increase in crime, but luckily there will be an increase in out of work police and soldiers who will wish to freelance for you to hire them or befriend them and offer them the use of your house while you and your family move into your garage. He pointed out that because force will be the means by which things are done legal or not, there would be no need for a legal system. Thus you can violate local building codes, homeowner rules and other local laws with impunity, installing wind turbines, have livestock in your garage and operate a home business in weaponry invention. His own preference in weaponry was an AK 47 because its easy to get bullets for it.
The point was to accept failure now and prepare. Those hanging on to the old system will suffer individual failure later. He does indeed live on a boat, with his wife, having made his decision to sell his Boston condo 2 1/2 years ago once he recognized that a US collapse was a likely possibility. He said the New Yorker got his number when they called him a bourgeois survivalist. He walks to work to an office building 15 minutes away. He declined to say how else he had prepared, but I left thinking of things I would want to stockpile. I was intrigued at what a normal San Francisco crowd this was and how accepting they were of his concepts. Their questions reflected this too. I was expecting more of an anarchistic, libertarian lot sporting tatoos and mohawks. Or at least the very lean peak oil sorts on bicycles (and there were some). This audience was rather more intellectual, middle aged and middle class which is what we are. Nor was it male dominated with quite a lot of women taking notes.
Almost all recently written mortgages contain a “due on sale” clause, permitting the lender to require complete repayment of the loan if the securing property is sold. This is the lender’s protection against a property being taken over by a bad credit risk and hence going into default. In this case, the lender is willing to waive that provision because you are native American. But you may not wish to assume the existing mortage; the rate is a bit high (although not outrageously so), and you may be able to do better if you shop around, particularly if you have good credit standing. A good resource to check would be http://www.mlcc.com, which is Merrill Lynch’s real estate lending arm. They have a panoply of different mortgage plans available, and you should take a look.
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LikeDislikeI don’t know of any problem for the buyer. You are merely assuming the previous buyer’s loan, yet you can refinance out of that loan at any time. On the other hand, the way I understand that loan, the seller acutally remains on the hook in the event that you default.
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LikeDislikeIt sounds like you can qualify for taking over the current loan without having to apply for a new loan. Here’s an example: let’s say the current owners bought the house for $ 155M, put 20% down, and got a 30-yr loan for $ 124M. Let’s say they’ve been paying on the loan now for almost 3 years and the remaining balance is now $ 120M. If they sell the house to you for $ 165M, then you would need to put $ 45M. But you could just continue to pay off the existing loan, i.e., assume the loan, and it would be paid off in just another 27 years.
Most home loans have a due on sale clause, meaning that they have to be paid off when the home is sold. But if this loan is assumable and you qualify, then this may be a good deal for you. I’m assuming that the current market rate for a home loan on tribal land is going to be at least 6.625% – double check to make sure this is the case. But if a new loan is going to be at the same rate or higher, then definitely consider doing an assumption because you not only will get the loan paid off sooner, but you’ll also avoid some of the costs associated with a new loan. Good luck to you.
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LikeDislikeI’m guessing that you have bad credit?
There’s lower rates available if you have good credit.
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LikeDislikeI’ve got to ask about the Wellies
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LikeDislikeSo dead on.
We have a good community system in Portland (www.brightneighbor.com), but I went to the Portland Gun Show today to check it out… prices are up, up, up on guns, and there are big ass machine guns for sale to those with the cash.
I’m talking Uzi’s, and 50 caliber humvee toppers – all for sale with the swipe of a credit card. Amazing.
But many people just want to protect their families, which means we should be able to be reasonable – for a while anyway.
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LikeDislikeText of Orlov’s presentation
cluborlov.blogspot.com/
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LikeDislikeYes, I chose the picture because of the wellies. It was raining which we in California never seem to be quite prepared for thus the improvisation of various odd garments. But he did say he lived on a tugboat. I couldn’t quite figure out what the black thing was hanging off his belt though.
Guns: that part is a little scary, though following this talk I received a link from my photographer friend who is finally getting his women and guns project off the ground possibly due to recent interests. Warren took me to a gun range when we worked together and I got a taste of what certain weapons could do with no training whatsoever. I’m more for the integrity of an old fashion hunting rifle than these automatics.
Nice community networking there brightneighbor. Someone asked about how we would communicate. He said he was confident that we would patch together some kind of ham radio, older electronic system that can be soldered together. The internet, I fear, is vulnerable.
Orlov talk also at energybulletin.net/node/48082
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LikeDislikeAmanda you are a source
of interesting useful information
and edification
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LikeDislikeThanks for this post and discussion, Amanda. I’m inspired to get back to reading my copy of Recipes for Disaster, put out by the Crimethinc ex-workers’ collective.
I’m afraid you’re right about the Internet being vulnerable. However, I’m confident that the publishing architecture of the web — and even apps like flickr — could be ported to some sort of downgraded, telephony-based, point-to-point relay, user-built network (which requires that we’ll have telephone network, I know).
My only quibble with your account is in a bit of wording in your assessment of the crowd — that you expected a more "anarchistic, libertarian lot" which suggests that you consider anarchists and libertarians to be alike or allied. I consider myself more an anarchist than any other -ist, so I feel obliged to point out that libertarians sit on the opposite end of the political spectrum, believing that states must exist to provide for national security (that is, to make war), the protection of persons and property, and the prosecution and punishment of victim crime — and, in my admittedly biased analysis, wherever the state might prove useful in "protecting the rights" of entrepreneurs and corporations to exploit people and The Commons. The mainstream media and political establishment have long presented anarchism and libertarianism as substantially similar by emphasizing a superficial analysis that they are both "anti-government" in their aims. But the devil is always in the details. Here’s a nifty poster that uses dishwashing as a way to define the -isms: Wash Your Own Dishes (PDF). Besides, to my view, they also dress quite differently.
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LikeDislikeThanks Dave for much needed clarification on those two isms. They existed together in my household in that Catherine’s husband identified as libertarian and his girlfriend as an anarchist. One was a bottom and one was a top, but they both shared the same bed as it were (under the umbrella of SM). It was glib of me to include those categories in my account thusly; I was trying to express the diversity found in the back-to-the-land, fend-for-yourself crowd I’ve seen drawn to Orlov’s analysis which may also include endtime Christians. This audience was perhaps better described by the characteristics of the Long Now Foundation which does have an intellectual distance from the beliefs of mainstream America, but in a more theoretical way. Catherine pointed out that the picture that Orlov was laying out did seem to have a sombering affect on the audience which implied that they did not consider collapse to be quite so imminent.
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LikeDislikeI think maybe it’s
a hard sided glasses case
he’s wearing clipped to
his pocket
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LikeDislikeLove the Long Now speaker series; I attend more talks than not and try deperately to drag friends. Even the lousy speakers can stimulate rich conversation afterwards. But the Long Now folks are predominantly techno-fixers. Meaning, they expect human ingenuity can transcend any wicked problem we face. Two things they don’t grapple with well are natural resource constraints and overshoot. Dmitry knows this territory very well. He adds depth to the traditional Jared Diamond approach to collapse by pairing the resource depletion issues with his rich insight into how people and societies cope under such circumstances. I think this is a bit outside of Stewart’s reach, so the follow-up conversation were more awkward than we’d have liked. By the way, behind the glasses case is the knife Stewart pulled on Dmitry during a question about weapons. Very odd.
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LikeDislikeHmm. I missed the knife pulling. Thanks, Poremba for illuminating on the techno inclinations of The Long Now. Makes sense with the clock and all. This was my first exposure to the foundation though a friend had told me about the book "The Clock of the Long Now". Given your description that would confirm that the audience put Orlov in the entertainment category, but may now be wrestling with the details.
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LikeDislikeI’m sorry to have missed the talk but with all these intelligent, thoughtful commentaries have brought me up to speed.
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LikeDislikeRe. Housing. I lived in a ‘bender’ – English version of yurt – for 4 years. I built bit myself from hazel woodland, recycled timber from roofs of demolished houses and a wood burning stove made from a calor gas bottle. Very ecological and only about $300! Enter ‘drewwith my home’ to see a photo of it.
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LikeDislikethanks for the posting.
I am a regular visitor to his blog and enjoy it very much as i did your description of the presentation.
regards
Froley
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