Increased Risk of Due on Sale Clause?
Just wanted to gauge everyone’s thoughts on whether or not there’s increased likelihood of lenders executing their Due on Sale clause with interest rates increasing so much over the last couple of years, and specifically the risk to those doing Sub-To deals. Seems like banks would be motivated to utilize this to exit their existing low interest loans. Anyone doing a lot of Sub-To deals worried about this?
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I saw this meme the other day with a pic of a kitten on it. It said "The odds of being killed by a kitten are low...but never zero". The only thing that's going to raise a flag to a lender is when the insurance policy comes back with a different owner and/or the tax bill comes back with a new owner. Other than that, they really won't have a reason to know. The likelihood of a due on sale clause being called by a larger national servicer is really low...but it can happen. Smaller banks that are portfolioing a deal are more likely to call it as they are more likely to catch it that a national shop.