Pre-foreclosure: Taking over payments?

Question

If I found someone who was going to lose their house and I agreed to pay all the back payments in exchange for the title, would the bank really care if I started making the payments and that the title was transferred? Under normal circumstances, they probably wouldn't know if it was transferred, but I'm thinking they might get suspicious when the payments are caught up and made on time.

Shanequa J. · Answer

Did the bank mention anything about calling the loan due?

Will Edgington · Answer

If this home happened to be in Colorado would this scenario be in violation of the Colorado Foreclosure Protection Act?

Eddie P. · Answer

No, never did.

Eddie P. · Answer

I tried this when I was first starting out. For over a year everything went well, until a hurricane came through town ripping the roof off. Since I was not the person on the loan, the bank ,(Lehmans Bros.)would not endorse the claim check regardless that I had a full notorized POA from the seller.

I eventually repaired and refinanced a few years later. I still have the insurance check in my drawer as a reminder.

Shanequa J. · Answer

The bank foreclosed on the property in August. He said he was only 3 payments behind. He had no clue about the property; it was his mother's and he was out of state. The only thing he had was a phone number and no one ever answered or returned calls. If he had more information, I probably could have saved the house. Also, I just found out that the trustee sale announcement was posted in March. If I knew it was already in pre-foreclosure and not just behind on payments, I would have moved a little faster.

Keith Canyon · Answer

shanequa...come back!  give us the update of what happened...don't leave us hanging!

sage

Manny Cirino · Answer

Jeff I always wondered the same thing. But what you have to think is that someone will to transfer title and allow you to make payments is already facing default. So if they don't transfer the title then they will be meet foreclosure and there credit will be destroyed. Would you want that scar on your credit report? I have heard investors, renting it to the owners and I have heard of agreements were the investor will put it a land trust, make the payments and agree to give it back to the owner. If did a refi and payed him. If you have no job, dead spouse, grown kids, bad health, and now your facing a foreclosure that will destroy your credit. Oh yeah, you will rap that title in a box with a golden bow and deliver it to my door with fresh baked cookies and christmas carolers!

Jeff B. · Answer

Pardon my ignorance on this, but why would someone want to let someone else take over payments on their loan?  What happens if I let someone assume my loan then they default on it.  Does that default come back on me?

How does the original owner prevent this from happening without having a new loan in the new owners name??

Jon Holdman · Answer

Any actual experience where a loan has been called, Ross? Folks here say that yes, they know of situations where it happened.  Far more where nothing happened.  I think the biggest risk of getting these subject to loans called is if interest rates rise.

Ross Falcone · Answer

I do not think this will work.  When the bank finds out this is going to cause a lot of problems.

Most mortgages have an an alienation clause.  This states that when the title is transferred, the lender must be notified and the balance of the mortgage is due immediately.

I am willing to bet the former owner does not have a mortgage that can be easily transfred to the new owner such as an assumable mortgage.

Ross Falcone
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