David Saks: Real Estate Practice : Lesson 3743

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

Real Estate Practice : Lesson 3743


Is this thing of the past, or is it a thing of the future, oh grand mystic exalted keeper of the cash ?

This was hailed as a "creative" financing technique once upon a healthy economic climate.

We're talking about the coveted "Shared Appreciation Mortgage",

more affectionately known as '

"SAM" !

This remarkable tool is said to have been used to lower even a normal interest rate for a borrower.

The sidebar to the deal is that the lender that gives the buyer this lower than normal interest rate also becomes entitled to a share of the profit when the me'nage is disposed of.

Here's how it pans out :

Under usual conditions, when a mortgage is applied for, the borrower is facing the usual principal and interest at whatever the market rates happen to be at the time. But when the time comes to sell the digs all of the money made from the sale of the house is money in the buyer's (now the seller's) pocket.

But the other side of the coin is that when the SAM way of financing is applied the buyer/borrower becomes eligible for a less than usual interest rate.

Now here's an example of this "creative" way to finance :

Let's say that the going interest rate is 7.5%.

The lender's not going to charge the borrower that 7.5% rate, but agrees to give the buyer an interest rate of 6.5% instead. And why, pray tell, would the lender lower the prevailing rate a whole point ? Well, it's none other than the fact that the buyer has agreed to share the profits with the seller, the lender or both when the property is sold. Isn't that 'creative' ?

Or is it unethical ? bogus

Lets look at the difference in the financing options with this 'creative form of financing.

A 200 thousand dollar loan for thirty years at 7.5% requires a monthly PI of $1398.43.

A 200 thousand dollar loan for thirty years at 6.5% requires a monthly PI of $1264.14.

That's a walloping 134 dollars a month difference.

Well, these types of mortgage are said to have been created to be paid off in a relatively short amount of time, say ten years, for example. When the time is up, the borrower is supposed to either refinance or sell the property and pay off the 'SAM', with the original lender on the 'SAM' sharing the profit.

But does the lender share any loss ?

How about it pros ? What are your thoughts about old 'SAM' ? Has RESPA been compromised ?

David Saks

Time&Temp Memphis

Legal Disclaimer
Please be advised that:

 The information and notices contained in this blog are intended to summarize recent developments and news. The posts are presented as general research and information. These posts are not intended, nor should be regarded, as legal advice. Some blog posts concern allegations made in civil lawsuits and in criminal indictments in United States Courts. All persons are presumed innocent until convicted of a crime and proven guilty. Readers who have particular questions or who believe that they need legal counsel should seek the advice of a qualified attorney. It is neither the editor's or author's intention to create a confidential relationship or any broker-client relationship via communication from this site at any time. Please consult with your state real estate board if questions & answers in the education section conflict with the laws of your region or if you need clarification regarding their applicability or how they may govern the services that you provide.

By entering this web site, you understand the following:
When you select a link to an outside Web site, you are subject to the privacy, copyright, security, and information quality policies of that Web site. David Saks:
1.DOES NOT control or guarantee the accuracy, legality, relevance, timeliness, or completeness of information contained on a linked Web site;
2.DOES NOT endorse linked Web sites, the views they express, or the products/services they offer unless linked web sites, the views they express, or the products/services they offer endorse or support David Saks in accordance with the standards of the Tennessee Real Estate Commission and the Federal Government's laws regarding commerce and the application, solicitation and transmission of internet-related concerns, commerce or social networking;
3.CANNOT authorize the use of copyrighted materials contained in linked Web sites;
4.IS NOT responsible for transmissions users receive from linked Web sites;
5. That DavidSaks.Com is biographical & real estate related. Some links within will leave this site.
6. http://activerain.com/profile/davidsaks is internet-compliant & abides by the rules & regulations of the Tennessee Real Estate Commission, Eve Maxwell, Executive Director.
7. Unless indicated otherwise, ActiveRain does offer listings, or IDX and is provided for licensed salespersons, brokers, buyers & sellers of real property as a community & professional service.
8. David Saks is a retired / licensed real estate broker in the State of Tennessee, license #290452, and an independent contractor.
9. Information is believed to be accurate, but not guaranteed, at any realty link or document connected to the World Wide Web & viewable by anyone connected to the internet who has a web browser.
10. Brokers, buyers, sellers, agents & anyone should independently verify any information prior to submitting any offer to purchase goods & services from any link.
11. Please Visit The American Real Estate Alliance or Memphis.8k.Com for additional information regarding property issues for real estate professionals and consumers.


Photos © & Licensed by Nova Development

All Content Protected © 
Before you even think about
committing a real estate crime
click this red button.
Real Estate Crimes

© All Rights Reserved.





"Information generated by the Department of Justice is in the public domain and may be reproduced, published or otherwise used without the Department’s permission. Citation to the Department of Justice as the source of the information is appreciated, as appropriate."

Department of Justice Legal Policies


  Real Estate Crimes


Click "HERE" For Today's Question



TheListen Now!

David Saks Show

Saturday Nite

9pm-12am Central

University of Memphis



America's Hobby

Click Elvis

Mr.Saks' participation in ActiveRain ended April 13, 2015.

His blog archives will remain online.

May God bless you.

Comment balloon 0 commentsDavid Saks • October 06 2014 12:47AM


This blog does not allow anonymous comments