AITD

With rates being at record lows we are going to see more AITD's then ever in the history of this country. If you can't qualify for traditional financing you can with a cooperative seller on a wrap.
 
Also 5 years from now when rates are 7.5%, what do you want to do. Wrap a 4.5% loan or get new financing at 7.5%. No brainer. AITD's are the future to extending excellent financing to a buyer.

Not to mention a seller potentially making money on the wrap. A seller could potentially getting 1 or 2 % return on lending the bank loan in place at a slight hire rate due to market rates being high at the time. 

AITD's are indeed going to be a big part of the real estate market moving forward.

An AITD is an all-inclusive deed of trust.  What that means is that an underlying loan is "wrapped" with a new loan.  The AITD was very popular in the early 1980's when interest rates were 20% or so.  I worked for a builder at that time and we used AITD's.  The way it would work would be, as an example, let's say the property has a $100,000 loan at 10%.  You create a new trust deed for $200,000 that includes the existing $100,000 loan.  Your new trust deed might only be 8% but it includes the underlying 10% loan.  You pay on the full $200,000 trust deed and in turn the holder of the AITD pays the underlying mortgage. 

There are several risks in this method due to the possiblity that the holder of the $200,000 loan doesn't pay the holder of the $100,000 loan and then you trigger a foreclosure.  The second problem can be that when the holder of the underlying loan figures out what you are doing, they may trigger the due on sale portion of their loan and either demand a payoff or start a foreclosure. 

I am not sure why you would use an AITD in this market because there is no financial advantage with interest rates being so low.  If you are trying to take over an existing loan, you may have a problem because lenders are very picky nowadays about a buyer taking over someone else's loan.  Before you do anything with an AITD, speak with a real estate attorney so you know your pluses and minuses.