Subject - To Financing

6 Replies

Hey BP, I need help. Looking to try and get a home using existing financing.

I understand how to sell it to the seller by letting them know that it could help their credit because I will be making full payments on time, that I will be able to offer more money to them because I won't have to get new financing, and that they will still get their equity out right away.

I understand how to buy the property using lines 203 and 503 of the HUD-1 "Subject to existing financing" and ensuring that the title company being used has closed using sub-to financing before.

What I am unsure about it how to verify with the bank that the seller is current. I am guessing I would need them to either add me on their account or call the bank with them present. The big issue I am concerned with is trying to buy a home that has foreclosure proceedings filed (so the owner is behind). I want to ensure with the bank that if I get the account current that they will stop the proceedings and stop the accruing of penalties. Then I would still be able to close on the property using sub-to and carry the existing financing.

Any advice on this would be great. Thanks to all of you for sharing your knowledge.

You could call the bank, with their permission, you might also be able to run their credit, I believe it will tell you if they have missed payments, it might not give you the current status, but if they tell you they never missed a payment and the credit report begs to differ that would be useful information.

You need to be added to their account as an Authorized Third Party (there are forms) and most recommend a Power of Attorney from the seller authorizing you on the account, along with the “you Mr. Seller are going to get screwed if I stop making payments” disclosure forms.

Originally posted by @Ryan Blake :

What I am unsure about it how to verify with the bank that the seller is current. 

 Super obvious thing not so far mentioned: look at the mortgage statement. 

Originally posted by @Chris Mason :
Originally posted by @Ryan Blake:

What I am unsure about it how to verify with the bank that the seller is current. 

 Super obvious thing not so far mentioned: look at the mortgage statement. 

 Yes, a recent statement or they could pull it up online and show you.

Thank you Mr/Mrs Seller. Now if I could just have your social, I'll go ahead and pull your credit....  

Make the payment directly and let them confirm online every month. Easy peasy.