Is There A Statute Of Limitations On DOS Clause?
If I purchased a Sub2 at today's low interest rates and kept up with the payments for a couple of years, could the bank accelerate the loan if the mortgages rates raise significantly in the future? If so, isn't that a big risk? What if someone purchased several properties in this manner and then the banks started calling the loans due. :-o
The DOS could be excercised as long as the loan is in place. You should be aware of this, it COULD happen at any time. There is a large group on this site that are advocates of leaving the original financing in place for a couple of years or so. This makes perfect sense. The interest brates won't move that far in only a few years. Thereby avoiding the likelihood of the second half of your query. If you were to find yourself in the position of having a lender excercise the DOS, you would either need to bring new financing to the table, or liquidate the properties, or lose them. The likelyhood of the DOS being excercised with you holding the properties for only a short time (2-3 years) is minimal, to almost non-existent.
[ Edited by jeff12002 on Date 04/28/2004 ]
Do not get overly worried about this happening. Banks are more worried about foreclosures (REO's). As long as the payments are made on time it is unlikely the bank will call the loan. In my opinion the only way banks would start calling loans is the interest rates go to the 1984 level of 20% and higher. It then would not matter if the note was in your name or someone elses.
Here is what some of our friends from "OTHER" Sub2 sites have to say about the DOS.
The DOSC is real and it does have fangs. ANYONE that tells you different is either a liar or has not done enough deals. I have had 3 deals that I walked into because the "sub2" deal was discovered by the lender(s). Of course if it doesn't affect you then you don't have to care. Also, Bruce Norris (hard money lender) has encountered DOSC issues on more than a few occasions. With that being said there are places to use both systems. XXXX system has many facets and you should really read the articles, discussion board and ebook to start to understand them all.
ShawnCode: