Getting a HELOC on a Sub2

3 Replies

Gooood morning Biggerpockets! 

I currently have several properties obtained "subject to", and am currently exploring options to utilize their equity to fund other non-RE projects.

While my POA on the trust allows for it, would obtaining a HELOC on a "subject to" property trigger the Due on Sale Clause? Or send up red flags that would catch the lender's attention.

How much communication/involvement is there between a bank and a lender when a HELOC is associated with a property?

Lloyd Stanton.
American.

Hi there! I am not fully understanding the Sub2 realm, but my husband and I used a HELOC to purchase 2 of our rentals. When using a HELOC, it's as though you're paying with "cash", so although we had a HELOC (this was liened against the home we live in mind you) we paid for 2 properties with "cash". I'm not sure if this helps at all. Are you financing a portion of a property (hence why there's a lender involved) and paying with the HELOC/"cash" for the other?

I obtained several properties "subject to" the existing loans. The properties are in a trust for which i am the trustee/owner, while the mortgage remains in the sellers name. As to not catch unwanted attention from the mortgage lender regarding the nature of the transaction, and thereby possibly triggering the "Due on Sale" clause in the mortgage i tend to avoid unnecessary contact with them. I would like to take out a HELOC against the "subject to" properties for some non-RE projects, and would like to know if that HELOC would send up any red flags with the lender of the mortgage i took "subject to"

i.e.

Mortgage Lender: Why is Lloyd Stanton taking out a HELOC on a property that is in the "Smith Family Trust", when the mortgage is still in "Bob Smith's" name?

I have full authority via a Power of Attorney to do so, just wonder if anyone has done so, or does it pose too much of a risk of triggering the DOSC.

@Lloyd, did you ever find out the answer to this? I posted this same question but did not receive any answers. So I thought i would search it. Please let me know what you figured out!

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