Credit card debt conversion to real estate mortgage debt

by Frank
(Greensburg, PA)

Local lenders will not give us mortgages on free and clear real estate (mostly commercial unfortunately). They say we owe too much. If some of the credit card debt is owed to large national outfits who also do mortgages, in another division perhaps(i.e. Chase credit, Chase Mortgage), will these lenders convert the short term to longer term in exchange for converting a "signature" debt into a "secured mortgage debt"?

LM says: Frank, I sincerely doubt that you can make that happen ESPECIALLY if you are dealing with big banks. The reason I say this is first, because these are two totally different types of debts. Just like you say, credit card debt is unsecured and as such is governed by a different set of rules. On top of that if you are dealing with big banks there are probably so many layers of bureaucracy, management and so on plus the fact that the credit card division can be in one place and the mortgage division can be 2,000 miles away. They don't talk to each other and are completely separate entities.

However, the one true way to find out is to pick up the phone and start making calls. Start with the bank that issued the credit card in question and see where you can get. However, be prepared to deal with some class A idiots because you will probably get some call center somewhere that only knows to read from a monitor and that's it.

Whatever you do if you reach any kind of agreement keep a detailed log of all your communications and get any agreements in WRITING.

I am also a bit surprised that you cannot get any kind of credit on your free and clear properties. This might be due to not only the fact that they are commercial but that they are not performing the way the bank would like to see, maybe??

I would also suggest going to as many banks as you can, specially if they are small, local banks where you might be able to talk directly to the decision maker. This is because different banks have different "portfolios" of loans and you might run into one that can accommodate your type of property.

It would be great if you came back and update us with your progress.

P.S. - thought of one more thing. Have you tried approaching any private investors and see if they can give you a loan on one of your properties?

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Response to comments by LM
by: Frank

On your comment about being surprised that I can't get credit on free and clear properties, I neglected to mention that we have about $105,000 in short term (credit card) debt and the reason all the banks have given is that we are "over-extended". Banks are notorious for not wanting to lend you money when you really need it. We have to all the local banks, several of which we know the managers, and on who we paid mortgage payments to for 20 years without ever being late on a payment. Their decisions are made based on ratios of numbers submitted in the application and if you don't meet their criteria, they won't lend.
On your comment about going to a private investor - I'm a little reluctant because there are private lenders out there who will break knee-caps if you don't pay on time, etc., etc. I do however know a few investors who are straight that I might approach and I appreciate the suggestion.

Private Investors
by: LM

Frank, when I brought up private investors I was referring to the legitimate kind, not the mob :-)

By private lender I mean someone like an uncle, another investor or just anyone that has the money to loan and will agree to lend it to you while you pay them whatever interest rate you both agree on. It's an investment on their part and is a loan to you for your purpose.

I have seen many investors, me included use private lenders successfully.

Any disagreement on this loan would be solved through an attorney or in court...not in a back alley ;-)

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