Over the years, my private lenders always had what I referred to as “remnant money.” Meaning, I had put most of their money to work on a one-to-one basis but often they had an extra $25,000 or so laying around that wasn’t enough to fund one whole residential (1-4 unit) deal.

Whenever I mentioned the subject of putting two lenders together, the issue that always came up was “who’s going to be in first position?” or more like “I’m not going to be in 2nd position!”

Well, I mentioned this to a friend of mine in California and he mentioned the fractionalized trust deed. This trust deed allows up to 10 lenders all with individual promissory notes to be in 1st lien position on one residential deal.  Here’s a sample…

Now, this is provided as a sample only! I’m not an attorney and you’ll need to check with your own real estate attorney and the SEC to see what the rules are about using it in your state but it’s a pretty cool concept and really simple to do.

There’s yet another article today, this time in the Tucson Weekly, about a woman who borrowed money to save her house (under excellent terms if you ask me), who then can’t make the payments (because she won’t get a job) and is now blaming the private lender and the broker.

Here’s an excerpt…

The loan didn’t require Fair to make any payments for a year, and it provided her with almost $30,000 in cash to live on.

When she received her first statement (AFTER A YEAR), she was stunned to learn that the Miracle Mortgage monthly payment was $1,625. Her Washington Mutual payment had been $625 a month.

“At the time, I really didn’t know,” Fair says. “I didn’t really understand.”

Give me a break.

This lady saves her house, gets $30,000 IN CASH, doesn’t have to make a payment for a YEAR and now she’s bitching?!

Stories like this really make me mad.  You can read the full story at Tucson Weekly if you want to get disgusted, too.

The press tries to justify her NOT getting a job by saying that she had to care for her son who was recovering from an illness but he was in a rehabilitation center with professional care.  There was no reason for her not to get a job.

I think it’s time somebody proposed some legislation to protect honest business people from manipulative, dishonest, lazy borrowers.