changing title without changing financing

or perhaps the realtor or broker knows the answer.

Check into taking the property "Subject To". You really don't won't to be in contact with their lender especially if they are current. An investor friendly title company or attorney can walk you through the process in your state.

Hope you two are doing well!
Michael

Rob, I am confused. Is "it" the title or the loan? You mention changing the title but leaving the financing in their name? How would relinquishing title to the property be of any help in them purchasing a new house? What are they trying to accomplish by getting "it" out of their name? What is "it"?

It was not that clear to me, and raises red flags that they are wanting to do anything to get their name off of title? Are there liens, judgements or back taxes?

Michael, I believe you're right. I was thinking of subject to but because of their situation they wanted to try to get the deed changed for the new lender to not think they were on the hook for the old property because the contingency for selling the old property was a stipulation from the bank. I honestly don't know how this would help them especially when they said they'd hold financing and pay the difference in what they owe and what my offer is. they've already moved into the new home so they're in a bit of a pickle. at the price I'd get it for it has a break even cash flow. I don't care that it doesn't make me money as much as I care that it doesn't cost me money.
hope this answers everyone's questions as well.
tell the wife we said hi Michael and hope to see you all soon. call me next week when you can. by then i'll have numbers on a mhp and 2multis.
i'll pm you my numbers.

If they deed the property to someone subject to, they are still on the hook for the loan and it will still show up on their credit report. It is the loan that puts them on the hook for the property, not the title, and you can't hide it from the bank. If the seller deeds the property to someone subject to, the seller is ultimately responsible for the initial loan. I imagine the bank doesn't see them as financially capable of holding onto the first property and buying the second property. One scenario that might work is wrapping it with an all inclusive deed of trust that would show a little cash flow. What are the numbers...balance, payments left, and interest rate, value of the house in as is condition? Does the seller want any profit, or do they just want out?

Sounds like they have already purchased a second home. If the bank would not lend because of the first mortgage they would not already be in their second home. Sounds like they just need to stop paying two mortgages. If that is the case the subject to would be perfect. They are still on the mortgage but its being paid freeing them of that financial burden of 2 monthly mortgage payments.
Is that correct?

Could be a good deal if the numbers are right!

Talk to you soon,
Michael

Michael, if the sellers credit wasn't trashed, why would you recommend a subject to where they were still responsible for the loan but lost control of the property if the buyer failed to make payments? Their credit could be at risk. If they did a wrap or a lease option they would still have control of the property. With a wrap they could foreclose, with a lease option they could evict, with a subject to they have no options if the buyer fails to make payments, putting their credit at risk.

Well in the "subject to" Rob would be the "buyer". He would send his payments not to the owner but to a 3rd party escrow company to make the payments. I would then lease option the property on the back end to a qualified tenant/buyer. Make money on the deposit, cash flow in middle and cash out when the qualified tenant exercises his option.

I think the idea is for Rob to make money, not protect the seller 100%. He is not trying to help the seller so much as make a deal for himself I believe. I could be wrong. Is this the case Rob?

Is there risk the tenant/buyer would not make his payments? Yes, but this is minimized by pre qualifying the tenant/buyer. Could the lender call the mortgage due? Yes, but highly unlikely.

Worst case situation for the seller would be foreclosing on Rob for non payment. Of course this is not Rob's intention.

Michael

"Worst case situation for the seller would be foreclosing on Rob for non payment. Of course this is not Rob's intention."

It is never anyone's intention to not make payments down the road, but life happens. In a subject to transaction, after deeding the property, the original seller has no rights to foreclose, he is at the mercy of the buyer keeping his loan current. If the buyer is late, the seller's credit gets dinged. Other than payment relief, a subject to transaction sucks for the seller. But if it's about Rob making money and not caring about the seller, it could work. But Rob must realize, if it blows up and the seller's credit is damaged, he could be sued for damages by the seller in a civil case. The majority of subject to transactions involve sellers who's credit is already trashed so it's usually not an issue. Very rarely will some one with good credit put themselves in a position where their credit hinges on someone else making the payments. Lease option would be a better approach.

you are correct. they just don't want the burden of two payments. they want out. can they lease option it to me? yes. however since they are not concerned with the how why wouldn't I take it subject to? yes I need to screen the tenant buyer, but for me if things "happen", they go and leave their option and on to the next tenant buyer. we don't want it to happen that way but I'm getting that mortgage paid by someone else.

I appreciate your concern for the seller. I also understand things "happen". the point for me is if they're comfortable with selling it to me subject to why wouldn't I? the reason for having a third party escrow isn't just for them. as you said, things happen. what if something catastrophic happened with their financial situation? if I'm sending monies to them and they use it for something else, what recourse would I have? the answer is I would have some recourse but why go there? a third party sees to it that all payments are made and recorded. my tenant buyer will make the payments and if not EVICTION!!!! next tenant buyer! of course the idea is to qualify the right one the first time so we don't have to reinvent the wheel so to speak. in the end everyone's needs are addressed.

If you are comfortable purchasing the property subject to, by all means proceed.

It should be noted that selling the property subject 2 can activate the acceleration clause in the mortgage. Because there would be a change in title, most mortgages allow the lender to demand payment in full. This doesn't always happen - but legally it could. This would require you as the buyer to get funding to pay off at least the mortgage.

So what happened? Did they go for the subject to?