Attorney told me to ask the lender for permission.

7 Replies

Im gonna do a pre-foreclosure deal. I called some attorneys in my area and one of them said I need the lender's permission to make the homeowner's back payments because if I dont ask for permission im just wasting my time. What do I do? When you buy a pre-foreclosure do you ask the lender for permission? Also, he said the lender will want me to have a good credit as well. What do i do in this situation?

It sounds to me like that particular attorney is making some assumptions that may or may not be true. In my area, someone being foreclosed on can pay off the debt right up until the auction takes place and restore their title. On the other hand, if you are doing a short sale (not paying enough for the property for the seller to pay of the debt), then you would definitely need approval from the lender. I have never known the lender to care about my credit, unless I was trying to assume the mortgage.

My recommendation would be to call around (to real estate agents, mortgage companies, etc) asking for a referral to a lawyer who specializes in this type of situation. I definitely recommend having a GOOD lawyer for this transaction and following his advice meticulously.

Sounds like you are trying to do a subject to? If so, the borrower (Not you) would have to request in writing, approval for a "subject to" transaction with a new owner. I don't know any lender that would knowingly allow a subject to. Other options would be an assumption but like a subject to, i don't know any lender that would allow an assumption. VERY few loans have assumption clauses. Why do an assumption if you can qualify for a loan? You'll have to qualify so, that's probably why this attorney is saying you need good credit (Relative term).  Still others just do it and hope they don't get caught.

What's a lawyer going to do except drain your pocket. It's the lender's call, not the lawyer's.

If you are doing a short sale as someone else opined, your credit means nothing. You paying the back payments mean nothing. You are buying the property for less than the balance of the loan so, that assumes you are getting your own loan or paying cash.

@Ron S. Sorry Ron for not giving you any details.

Here there are:

Yea, its a subject to. The homeowner has 8k in back payments and what I want to do is just pay them off and continue paying to the lender. I will buy the property for what the homeowner owes in it. Or I might give the homeowner some money when I sell the house. Other attorney asked me if the mortgage permits assumption of the loan. And I told him i didnt need that and he stopped answering my emails. And this one told me I need the lender's permission. And I asked him if he was saying that because of the due on sale clause and he said yea and i told him it was ok that it didnt really matter as long as the lender gets the money but he continued telling me that I need the lender's permission. What should I do?

@Account Closed This is a common question in this forum category and I'm sure you can find tons of threads if you do a little searching. Basically, if you buy sub2 to flip the property, you shouldn't have to worry too much since you'll be in and out of the transaction before the lender knows what's going on. As long as they get a full payoff in a short amount of time, it won't really matter to them.

If you want to hold the property as a rental, you should have an exit strategy to payoff the lender. Either cash, access to cash, or the ability to refinance in case the loan gets called due on sale, which is rare but does happen depending on the lender. If Ron S owns your loan, it will be called due. If it's a big bank, you have a better chance of it not.

Originally posted by @Fili Aguirre:

@Ron S.Sorry Ron for not giving you any details.

Here there are:

Yea, its a subject to. The homeowner has 8k in back payments and what I want to do is just pay them off and continue paying to the lender. I will buy the property for what the homeowner owes in it. Or I might give the homeowner some money when I sell the house. Other attorney asked me if the mortgage permits assumption of the loan. And I told him i didnt need that and he stopped answering my emails. And this one told me I need the lender's permission. And I asked him if he was saying that because of the due on sale clause and he said yea and i told him it was ok that it didnt really matter as long as the lender gets the money but he continued telling me that I need the lender's permission. What should I do?

 You need a lawyer experienced in real estate investing. Your information is correct and the lawyer is inexperienced. See if Great American Title has an office in town. They know how to do these. Call the Phoenix office if the local office can't or doesn't exist. Ask for Mary Saer.

Originally posted by @Fili Aguirre:

@Ron S.Sorry Ron for not giving you any details.

Here there are:

Yea, its a subject to. The homeowner has 8k in back payments and what I want to do is just pay them off and continue paying to the lender. I will buy the property for what the homeowner owes in it. Or I might give the homeowner some money when I sell the house. Other attorney asked me if the mortgage permits assumption of the loan. And I told him i didnt need that and he stopped answering my emails. And this one told me I need the lender's permission. And I asked him if he was saying that because of the due on sale clause and he said yea and i told him it was ok that it didnt really matter as long as the lender gets the money but he continued telling me that I need the lender's permission. What should I do?


 

You risk accelerating the loan if you do it without the lender's permission.

Sounds like he is "assuming" you want to "assume" the loan which obviously you'd need permission. Sounds like that is not the case and you simply want to take it subject to. Lenders don't give permission for subject to transactions from my understanding and technically they could call the note due when title transfers as most notes have a due on sale clause. Most parties don't typically call notes due though when people are making timely loan payments, but it's possible for sure.

You need a reinstatement quote, payoff, and to understand the loan terms. You need a competent agent or attorney in your corner, and also likely should get seller an attorney so they understand what a subject-to is, the pros and cons, and the paperwork. Doing subject-to transactions with homeowners in foreclosure are some of the most sensitive transactions around.