[StBernard] Question for SBA

[Westley Annis]

I'd like to submit a reason for the SBA wanting a "Demand for Payoff" letter
in order to not reduce your SBA loan amount by the amount of your current
mortgage.

Very simply, the SBA does not want to be in competition with the mortgage
industry.  The SBA would put a real hurt on the mortgage industry if they
made loans freely available at below market rates.  Anyone who qualified for
an SBA loan would then automatically replace their mortgage with the more
friendly SBA loan.  This could jeopardize the future of the mortgage
industry which prices it's loans assuming they will stay on the books for a
certain period of time.  If the SBA loan program messed up this pricing and
timing, it could wreak havoc in the mortgage industry.   As a result, SBA
will only "replace" mortgages issued by lenders who demand payoff.

I do not have any "official" document that states this as being the reason,
but given the government's (SBA) advantage over non-governmental lenders (no
taxes to pay or need to make a profit), I can see their rationale for this
requirement.


Paul V. Perez
Certified Financial Planner

----- Original Message ----- 

>

> Roy,

>

> We have brought this to the attention of the SBA reps as well and we can

not

> get any response from SBA or the major players in the mortgage industry.

It

> has become a financial trap for our residents.  We continue to press the

> issue and will post any info that we get.  in the meantime, try calling

the

> attorny general's consumer division and see if they can be of some

> assistance.

>

> Good luck and God Bless,

> Craig

>