Jack Marinello

I just read the article about Joe's passing. I am deeply saddened by this news. I had the pleasure of meeting Joe through our membership together in the Real Estate Educators Association. I looked forward to attending convention each year and made sure I sat on the front row of the classes Joe was teaching. He was a wonderful instructor, mentor and all around "good guy". I have some photos of him speaking to our group in 2001 in Orlando. I remember finding a "vintage poster print" for the Italian community of "Ferrara" featuring an ancient fortress. I sent it to Joe. He expressed his surprise and appreciation. I miss you Joe. Jack Marinello, DREI Training Director Compliance Officer First American Title Insurance Agency, Utah 560 South 300 East Salt Lake City, UT 84111 801-578-6805 Office 801-455-5880 Mobile

I presume the intent of the above opinion is to suggest that "assumable" loans would be a viable financing alternative in today's real estate market. Yet, as a California real estate licensee since 1978 I have somewhat of a different recall of the events that took place. See Wellenkamp v. Bank of America; Invalidation of Auto0matically enforceable Due-on-sale Clauses at http://www.jstor.org/pss/3480063 Many lenders had "due-on-sale clauses" in their trust deeds for years leading up to the landmark decision by California Supreme Court in 1978. In 1975 Cynthia Wellenkamp hired attorney Fred Crane to represent her as a defendant in a case where Bank of America was the plaintiff. BofA attempted to enforce the due-on-sale clause found in the trust deed signed by the prior owners Birdie, Fred and Dorothy Mans. Ms. Wellkenkamp had not assumed the existing loan, but merely took title to an owner occupied home, "subject to" the $19,100 loan from BofA. The case went all the way to the California Supreme Court. In 1978, the court ruled BofA could not justify calling the note due and payable. One reason was that BofA had more security for their loan than they did when they made the loan to the original borrower and Ms. Wellenkamp had kept the payments current on the loan. This ruling opened the flood gates in California for buyers to take title "subject-to" existing loans. No formal loan assumption was required on loans from state chartered institutions. Yet, the prior owner/borrower was still held ultimately responsibility for the promissory note they had signed and responsible for any deficiencies. The non-enforceability of the "due-on-sale clause" was overturned in 1982 when a federal law entitled the "Garn/St. Germain" bill originated in the US Senate and was passed by Congress. It put the enforceability back into the deeds of trust in California. This had a serious dampening effect on the market. FHA and VA loans allowed non-qualifiers to take loans "subject to" until the end of the 1980's. VA loans could be assumed by another Veteran who substituted their "VA eligibility" which had the effect of releasing the original VA borrower from liability on the loan. A simple "subject to" purchase did not release liability. Today the "due-on-sale clause" is alive and well. Yet many buyers are taking title to properties subject to existing liens. Why aren't lenders automatically enforcing their right to call the loan due and payable? It is simple. To do so they might have to initiate a foreclosure action. If the new owner on title is current on their payments and the lender is receiving a higher yield than today's historically low rates; why would a lender pursue such a course? Perhaps someday when prices have stabilized and some appreciation has returned to the market; and, interest rates are above 8%, lenders may consider enforcing the "due-on-sale clause" that is still found in a trust deed. Jack Marinello, DREI Real Estate Educator