Comments on: Overcoming the Objections from "Subject to" Sellers http://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/ Learn, Network, Invest Sun, 12 Feb 2012 02:59:04 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Erikhttp://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/#comment-80047 Erik Fri, 12 Mar 2010 17:18:14 +0000 http://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/#comment-80047 - "I thought it was a little dumb for a guy to be up in front of 100 people explaining how he breaks the law when he does these transactions."Saying he breaks the law sounds a bit like saying he robbed a bank. He's violating a civil-law mortgage contract, subject to contract law, not violating a criminal law. No police officer can arrest him for not adhering to that clause of the contract (unless it was done with criminal intent to defraud). So long as the subject-to buyer has intention to make payments and satisfies all other clauses of the mortgage contract the bank cares most about getting its regular payments.As a successful investor at a local club pointed out, this is a good reason to have deep pocket partners or hard money lenders available in case a loan is called. I think the investor at the meeting had one case of a loan called and worked with her option buyer to accelerate his purchase. She brought in a mortgage broker and got her option-buyer to close and paid off the subject-to mortgage that way. Her hard-money lender was available as a backup plan. - “I thought it was a little dumb for a guy to be up in front of 100 people explaining how he breaks the law when he does these transactions.”

Saying he breaks the law sounds a bit like saying he robbed a bank. He’s violating a civil-law mortgage contract, subject to contract law, not violating a criminal law. No police officer can arrest him for not adhering to that clause of the contract (unless it was done with criminal intent to defraud). So long as the subject-to buyer has intention to make payments and satisfies all other clauses of the mortgage contract the bank cares most about getting its regular payments.

As a successful investor at a local club pointed out, this is a good reason to have deep pocket partners or hard money lenders available in case a loan is called. I think the investor at the meeting had one case of a loan called and worked with her option buyer to accelerate his purchase. She brought in a mortgage broker and got her option-buyer to close and paid off the subject-to mortgage that way. Her hard-money lender was available as a backup plan.

]]> By: Eric Schwagerhttp://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/#comment-75247 Eric Schwager Fri, 13 Nov 2009 02:19:54 +0000 http://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/#comment-75247 Milton, Thanks for this interesting piece of advice. In your own practice, how to you deal with the acceleration clause? It seems there are many techniques and many opinions -- and I've read a lot but can't really figure out how I would do it myself -- but I'd like to hear from an actual practitioner. Also, I generally understand that buying on a land contract puts the buyer in a weak position. I understand how in this case it's a tradeoff for not having to front the cash to cover that equity; have you ever been "burned" using this technique? You mentioned that you're using a hyrid land contract. Could you possibly share it with us? Regards, Eric Milton,
Thanks for this interesting piece of advice. In your own practice, how to you deal with the acceleration clause? It seems there are many techniques and many opinions — and I’ve read a lot but can’t really figure out how I would do it myself — but I’d like to hear from an actual practitioner.
Also, I generally understand that buying on a land contract puts the buyer in a weak position. I understand how in this case it’s a tradeoff for not having to front the cash to cover that equity; have you ever been “burned” using this technique?
You mentioned that you’re using a hyrid land contract. Could you possibly share it with us?
Regards,
Eric

]]> By: Davidhttp://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/#comment-68094 David Tue, 25 Aug 2009 13:50:14 +0000 http://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/#comment-68094 does the title stay in the current owners name while in escrow or does it get put in the investor/buyers' name while in escrow? does the title stay in the current owners name while in escrow or does it get put in the investor/buyers’ name while in escrow?

]]> By: Tom Lindmarkhttp://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/#comment-56521 Tom Lindmark Sat, 03 May 2008 17:12:57 +0000 http://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/#comment-56521 423-It's pretty amazing what people will do without regard to the consequences. In Phoenix we have people advertising on Craigslist the sale of their home's fixtures before the house gets turned over to the bank. They are ripping out kitchen cabinets, flooring, air conditioning units, ceiling fans, basically anything of value and selling it before the banks can get their hands on the property. 423-It’s pretty amazing what people will do without regard to the consequences. In Phoenix we have people advertising on Craigslist the sale of their home’s fixtures before the house gets turned over to the bank. They are ripping out kitchen cabinets, flooring, air conditioning units, ceiling fans, basically anything of value and selling it before the banks can get their hands on the property.

]]> By: 423Chandlerhttp://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/#comment-56448 423Chandler Thu, 01 May 2008 00:50:38 +0000 http://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/#comment-56448 Lindmark,I agree with you. I happened to see a speaker on these "subject to" deals one time and he basically said that he just doesn't notify the lender and hope the lenders hardly ever catch on. He didn't really seem to think it was that big of a deal. I thought it was a little dumb for a guy to be up in front of 100 people explaining how he breaks the law when he does these transactions. Lindmark,

I agree with you. I happened to see a speaker on these “subject to” deals one time and he basically said that he just doesn’t notify the lender and hope the lenders hardly ever catch on. He didn’t really seem to think it was that big of a deal. I thought it was a little dumb for a guy to be up in front of 100 people explaining how he breaks the law when he does these transactions.

]]> By: Tom Lindmarkhttp://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/#comment-56441 Tom Lindmark Wed, 30 Apr 2008 16:03:52 +0000 http://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/#comment-56441 423 Chandler you're right. Just about every loan that has been originated, whether it's FHA, conventional, subprime or Alt-A has a due on sale clause. So any wrap like this triggers that clause. If the lender doesn't know about it they won't call the loan but if they do they will call it. Nevertheless, it's fraud to do these transactions and not tell them. 423 Chandler you’re right. Just about every loan that has been originated, whether it’s FHA, conventional, subprime or Alt-A has a due on sale clause. So any wrap like this triggers that clause. If the lender doesn’t know about it they won’t call the loan but if they do they will call it. Nevertheless, it’s fraud to do these transactions and not tell them.

]]> By: 423Chandlerhttp://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/#comment-56426 423Chandler Wed, 30 Apr 2008 01:05:15 +0000 http://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/#comment-56426 Milton,The one thing I can't get past on "Subject to" deals is that most (if not all) mortgage notes require the lender to be notified upon transfer of deed of trust. It seems like during a period of rising interest rates, they would call the loan as soon as you notified them.Thanks, Michael Milton,

The one thing I can’t get past on “Subject to” deals is that most (if not all) mortgage notes require the lender to be notified upon transfer of deed of trust. It seems like during a period of rising interest rates, they would call the loan as soon as you notified them.

Thanks,
Michael

]]> By: Payday Loanshttp://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/#comment-56417 Payday Loans Tue, 29 Apr 2008 17:51:16 +0000 http://www.biggerpockets.com/renewsblog/2008/04/28/overcoming-the-objections-from-subject-to-sellers/#comment-56417 Wow! That is pretty messed up. Thanks for the advice. Wow! That is pretty messed up. Thanks for the advice.

]]>