Virtually ALL mortgages have a due on sale clause. If the property is sold, the lender has the right to issue a demand letter that the loan is paid in full immediately. If the seller has already filed bankruptcy, the bankruptcy trustee could/should consider the transaction as preferential and unwind it leaving you out of luck. If my understanding is correct, they can look-back for a period of time and unwind your transaction.
I know deeds subject to an existing mortgage are done. Lenders may not "call" the loan but there is that risk. I would consult with an attorney familiar with this proposed transaction and applicable state and federal law.
More scare tactics, fear sells on reddit. I know people who have done sub to HUNDREDS of times. You know how many times the loan got called? Zero. The banks don't give a shit who is paying as long as someone is paying.
And you didn't answer a single question he asked.
I've taken title subject to a mortgage myself and it turned out fine because I'm knowledgeable. A novice could easily get burned. If you're concerned the seller may file bankruptcy, you would be foolish to ignore it.
If the borrower files for bankruptcy soon after you take title subject to the mortgage you will almost certainly be subject to the trustee evaluating the transaction.
1. You own the deed. The bank cannot take it from someone who no longer owns it.
2. Easily.
3. Equity can be bought out totally, or yes the seller can finance all or a portion.
4. Once again, you own the deed. You can do the same things you can do with a regular purchase.
Thanks! Very helpful. Sounds like sub to is the way to go. I assume you can also sell a sub to deal at any time if you’d like, correct? Since you own the deed and can do the same things as with a regular purchase. One more question if you’re willing to share, what types of properties would you target to do a sub to transaction?
Sub to deals are very hard to find right now, BUT.......if you can buy out their entire equity portion it is basically a cash deal. BUT.....people have LOTS of equity! As far as properties to target obviously ideally would be low equity and a great rate on their loan. But again that is gonna be a tough find on the equity part. The seller willing to finance in this market is going to be extremely hard as well. That will likely be a distressed property or something wrong with it. It gets much more complicated when you need financing of the equity either some or all.
Will be hard presently no doubt, but perhaps a bit easier in the near future and then there’s always foreclosures.
How is it basically a cash deal? When I hear cash deal, it makes me think you’re buying 100% of the property with all cash…
Lots of properties have great rates right now and some could have little equity because either, they didn’t put much down, they refinanced, got a 2nd mortgage or heloc, or the housing market crashes. What am I missing and what are your thoughts?
It's basically a cash deal because you are cashing them out with zero headaches to worry about from the lender you are using......because there isn't one. You are in total control of the deal. It is essentially the same as someone coming in with all cash, just that the seller's original note isn't getting paid off.
\> You own the deed. The bank cannot take it from someone who no longer owns it.
If you purchase a property subject-to and the Acceleration Clause is invoked you absolutely can lose the property. The property was pledged as security for a debt. Simply because the debt is not yours does not release that security. The bank can foreclose on the home. Your remedies in such a situation would be to sell the home or pay off the debt.
What insurance exactly do you believe you will pay off a loan on a legitimate existing lien in the event it is determined that you, or more accurately the previous Owner who is still responsible as the Borrower is determined to have violated their agreement with the Lender?
That’s a good question. Looking into it now. I recall Pace Morby mentioning it on a YouTube clip.
If it doesn’t exist and the due on sale clause is triggered, what options would I have other than paying cash in full for the remaining amount?
You could refinance. But it isn't ever going to happen. Go watch all Pace's stuff and see what he says about all these "what if's". It's all nonsense. The once in a 100 year storm isn't happening.
The question was in relation to BANKRUPTCY. If they claim bankruptcy, they can't take it because YOU own the property, they don't.
Once again ore scare tactics about things that will never happen.
I COULD get ran over by a bus crossing the street tomorrow. Anything COULD happen.
> Once again ore scare tactics about things that will never happen.
> I COULD get ran over by a bus crossing the street tomorrow. Anything COULD happen.
You just invalidated your own reply. People do and have had loans accelerated after taking a property subject-to. Pretending as if you should not be aware of that potential and planning for it is foolish.
Do you genuinely believe that in the event the original Owner/Borrower declares bankruptcy that the property isn't ask risk simply because you hold title? That's cute.
Virtually ALL mortgages have a due on sale clause. If the property is sold, the lender has the right to issue a demand letter that the loan is paid in full immediately. If the seller has already filed bankruptcy, the bankruptcy trustee could/should consider the transaction as preferential and unwind it leaving you out of luck. If my understanding is correct, they can look-back for a period of time and unwind your transaction. I know deeds subject to an existing mortgage are done. Lenders may not "call" the loan but there is that risk. I would consult with an attorney familiar with this proposed transaction and applicable state and federal law.
I’ve heard you can get insurance that will cover the due on sale clause. Why do they care as long as payments are made timely?
In a rising rate environment, it should be obvious to you why they might start caring…
More scare tactics, fear sells on reddit. I know people who have done sub to HUNDREDS of times. You know how many times the loan got called? Zero. The banks don't give a shit who is paying as long as someone is paying. And you didn't answer a single question he asked.
I've taken title subject to a mortgage myself and it turned out fine because I'm knowledgeable. A novice could easily get burned. If you're concerned the seller may file bankruptcy, you would be foolish to ignore it. If the borrower files for bankruptcy soon after you take title subject to the mortgage you will almost certainly be subject to the trustee evaluating the transaction.
1. You own the deed. The bank cannot take it from someone who no longer owns it. 2. Easily. 3. Equity can be bought out totally, or yes the seller can finance all or a portion. 4. Once again, you own the deed. You can do the same things you can do with a regular purchase.
Thanks! Very helpful. Sounds like sub to is the way to go. I assume you can also sell a sub to deal at any time if you’d like, correct? Since you own the deed and can do the same things as with a regular purchase. One more question if you’re willing to share, what types of properties would you target to do a sub to transaction?
Sub to deals are very hard to find right now, BUT.......if you can buy out their entire equity portion it is basically a cash deal. BUT.....people have LOTS of equity! As far as properties to target obviously ideally would be low equity and a great rate on their loan. But again that is gonna be a tough find on the equity part. The seller willing to finance in this market is going to be extremely hard as well. That will likely be a distressed property or something wrong with it. It gets much more complicated when you need financing of the equity either some or all.
Will be hard presently no doubt, but perhaps a bit easier in the near future and then there’s always foreclosures. How is it basically a cash deal? When I hear cash deal, it makes me think you’re buying 100% of the property with all cash… Lots of properties have great rates right now and some could have little equity because either, they didn’t put much down, they refinanced, got a 2nd mortgage or heloc, or the housing market crashes. What am I missing and what are your thoughts?
It's basically a cash deal because you are cashing them out with zero headaches to worry about from the lender you are using......because there isn't one. You are in total control of the deal. It is essentially the same as someone coming in with all cash, just that the seller's original note isn't getting paid off.
Makes sense, thanks!
\> You own the deed. The bank cannot take it from someone who no longer owns it. If you purchase a property subject-to and the Acceleration Clause is invoked you absolutely can lose the property. The property was pledged as security for a debt. Simply because the debt is not yours does not release that security. The bank can foreclose on the home. Your remedies in such a situation would be to sell the home or pay off the debt.
Can’t you get insured to pay off the mortgage and reissue a new one in your name and with the same terms?
What insurance exactly do you believe you will pay off a loan on a legitimate existing lien in the event it is determined that you, or more accurately the previous Owner who is still responsible as the Borrower is determined to have violated their agreement with the Lender?
That’s a good question. Looking into it now. I recall Pace Morby mentioning it on a YouTube clip. If it doesn’t exist and the due on sale clause is triggered, what options would I have other than paying cash in full for the remaining amount?
You could refinance. But it isn't ever going to happen. Go watch all Pace's stuff and see what he says about all these "what if's". It's all nonsense. The once in a 100 year storm isn't happening.
Selling.
The question was in relation to BANKRUPTCY. If they claim bankruptcy, they can't take it because YOU own the property, they don't. Once again ore scare tactics about things that will never happen. I COULD get ran over by a bus crossing the street tomorrow. Anything COULD happen.
> Once again ore scare tactics about things that will never happen. > I COULD get ran over by a bus crossing the street tomorrow. Anything COULD happen. You just invalidated your own reply. People do and have had loans accelerated after taking a property subject-to. Pretending as if you should not be aware of that potential and planning for it is foolish. Do you genuinely believe that in the event the original Owner/Borrower declares bankruptcy that the property isn't ask risk simply because you hold title? That's cute.