Sub 2 on a foreclosure

[Lucas Howes]

Can you get subject to financing on a foreclosure? Basically the idea would be seller is being foreclosed on and owes 80k, plus 5k fees for the foreclosure. Can I just pay off the fees and then start making payments on the 80k and take over the loan? Is this legal, or is it a state by state thing? Also, does anyone have any experience doing these? Thanks!

[Jeff Kehl]

@Lucas Howes I've never done that but generally I think it would work. The foreclosure process is always laid out in state law so for sure it is a state-by-state thing. So your best bet is to run this by a local attorney. 

But if you have a property in mind you can give it a try. Sign a Purchase contract with the owner specifying 'Subject to Existing Financing' and specifying that you will pay $x in fees related to the foreclosure. Once you have that signed contract in hand take it to the attorney/trustee handling the foreclosure. That should stop the foreclosure. 

Then setup a closing for the contract with an attorney/title company.

The lender involved may not be very happy but if you can get in touch with them, explain that they don't have to bear the cost of foreclosure and convince them you will make payments/ refi them out quickly.   

[Lucas Howes]

@Jeff Kehl That sounds like it should work. Its one of those things that should work in theory, but could potentially have some issues with. I think dealing with local banks on this would be easy, but have you ever had ANY luck dealing with the Wells Fargos of the world? I don't know if I could just call and convince someone there to do something. Everyone at the larger banks basically just says I'll get back to you in a week, there isn't much negotiation, at least in my (albeit limited) experience.

[Account Closed]

Yes, it can be done. It is a complex transaction but very profitable. I've dealt with Wells Fargo a lot over the years. Once you get the hang of it, you will do lots of them.

[Jeff Kehl]

@Lucas Howes Don't bother trying to talk to the lender involved especially if they are a big bank. Talk to the attorney/trustee handling the foreclosure sale. They expect to have to deal with things like a last-minute sales contract.

[Account Closed]

@Lucas Howes I've done these for twenty years. Yes, it is legal. It would help to figure out the deal if you could post the ARV and how much arrears there are, (arrears are different than fees) if there is a 2nd, are the taxes current, any other liens on the property, how much to rehab and when is the sale date?

If you talk to either the bank or the trustee they will simply tell you that they can't talk to you because you are not on the note.

There is a much, much better way than the direction you are currently headed, but I need details.

[Alex Velasco]

@Lucas Howes - Mortgages are contracts, so you might want to take a look at the written terms of the mortgage security instrument for the loan. In a standard template mortgage or deed of trust, you're probably going to find a section that prohibits the borrower from transferring ownership of the property to a third party without written permission from the lender. If that clause is in the document then deeding the property to you could be considered a non-monetary default that would be grounds for foreclosure regardless of whether the payments are made on time.

[Taylor Calloway]

@Lucas Howes I would love to hear what you learned in this process and how things worked out. I am currently in a very similar situation and having a difficult time finding much info on this process. 

Thanks!