Subject To question

2 Replies

Hi.  I have what seems to be a trivial question related to Subject To's, but I really have no idea of what the answer might be.

I've read that mortgage companies are not so happy about people assuming mortgages and are likely to call the loan due if they get wind of it.  So (from what I interpret from my reading) is that we do the subject to's just hoping the loan company doesn't hear of the assumption (is this even legal?).   But my main question is this - how do you get the coupons for the loan switched over to coming to your home address without that being a clear message to the mortgage company that the loan has been assumed???  Or, if you setup auto draft from a bank account - same question.  And a final question/comment - it sure seems like a settlement with a title company would surely result in something going back to the original mortgage company and flagging the change over.  How do all of these mechanics take place without the loan being called in then?

Thanks in advance


Couldn't tell you the specifics as I haven't yet done a sub-2 deal yet but my understanding is that you need to first put the property into a trust of the current owner. Then the beneficial interest is transfered over to your llc thats making payments. I'd love to hear follow up on your other questions.

I've since found some great web resources for Subject To's.  First - it is not legal to try and conceal anything from the lender....full disclosure is the key.   Any investor who tries to prevent the lender from knowing a change took place is breaking the law - so DON'T GO this route.    The right path is that you follow all proper procedures including filling out the form which informs the lender of the change.   The risk that you must decide if you want to take as an investor is that the lender will not call the note due, since it is likely going to be a better performing loan (by the investor).    This assumption could backfire if interest rates go up and lenders want to recapture the funds so they can originate new loans at a higher rate.    Summary:  Follow the law and ethics for a Subject To and don't try to conceal anything.   

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