Subject To's
Hello:
When I joined this site I was looking for information on how to assume a loan, but after reading it looks like you can't do that anymore. So now Subject 2's sound interesting.
Here is my situation. I have a girlfriend who is behind on her payments and will be loosing her house soon. She is behind about 4 monthes, and I understand that I would need to catch up her payments. She is not looking for any money from me she just wants out. What is the process of Subject 2's? Do I need a Lawyer? Where can I get the forms that she would need to sign? Also do I own the home and can I rent the home out or sell if I choose to?
John Locke, a sponsor on this website, has an outstanding book which outlines the steps you must follow to use the Subject To investment technique. If you are serious regarding taking over your friends home, purchase the material, and within a few weeks you will begin to understand the process. Tell your friend to salvage her bruised credit and avoid foreclosure.
By the way, mixing business transactions with friends can be risky. Think about it and move accordingly. Determine your investment strategy ASAP! If the strategy is to make the mortgage current and not lend the friend a lump sum of cash, the question remains, where does she plan to live? The standard Subject To agreement transfers the deed to you. Not a complicated task but VERY sticky if she is crying on your shoulder if she must move since legally it is yours. Trust us, we are not mentioning all the undesirable scenarios but agreements among friends are risky.
Get John’s material and keep us posted on the progress.
Eric & Rosa
[addsig]
Real simple my friend..
Go to your local STATIONARY STORE and buy a blank Quitclaim DEED for your state.. Fill in the Legal description, the sellers name and your name, then have seller and buyer sign it in front of a notary. You can get the legal description from the assessors office or recorders office at courthouse (legal descrip) will be on the mortgage which is filed at the recorders office.
Voila! You now own the home.. Now you have to deal with the existing lien (a.k.a mortgage). Here comes the second document, have the owner sign a "authorization to release information" a simple paper you type up saying the borrower gives the lender permission to talk to and deal with you regarding the mortgage.. You pay up the mortgage or make some other financial arrangements with the lender re. the back payments and your good to go..
Also make sure to pay and maintain the existing insurance AND/or take out a NEW policy in your own name, and don't go out of your way to inform the lender you purchased (have deed to) the house..
Should the lender find out, (like after you file your deed down the road), they don't care.. This is the situation, they can keep the PERFORMING mortgage which your paying, or foreclose on the property.. I have yet to know of a lender thgat forecloses on a property when payments are current and being made!!
They only foreclose when forced to, thats when the payments stop being made..
If you want to give any money to the seller I'd reccomment giving a PROMISSORY NOTE (not secured against the property) with interest only payments w/balloon, or no payments and a balloon down the road for some if any equity..
It is all very easy, the trickiest part is the insurance, I hate insurance because they share the policy information with the lender.. But should the lender become aware of xfr of deed (ownership) I've in the past told the lender to take it or leave it, my money will always continue to be on time and that's a profitable performing note for them OR they can foreclose on the property, have a dead asset (non selling reo) and loose money. But I will not pay off the mortgage yet unless they want to do a greatly discounted short sale..
Hope that helps some..
Blabber mouth Chris,
cky,
Glad to meet you.
However, you have probably posted the some of the worse advice I have seen on Subject To investing, starting with a Quit Claim Deed.
Let's just start with you opening statement Quit Claim Deed you mean you take a Deed that may include partners you don't even know about. Quit Claim Deeds only transfer an interest in a property.
You always use a Warranty Deed take the time to look up the difference.
Then when you have that straightened out we can go from there.
John $Cash$ Locke
A safe way to avoid the dos clause is to create a land trust (after you get the deed) you can use the current owners last name. For example: John Smith will be Smith Family Trust. Then when you contact the insurnace company they will see it's a trust and when they report it to the lender, the lender will assume (the current owner created a family trust for asset protection) and you should be safe from the acceleration of the dos clause.
Hope that helped