Homeowner · St. Petersburg Florida · Member since 2022 · 3 posts · 3 votes
We have a potential deal "on paper" where we would take over a conventional loan from a failed flipper. People are telling us that assuming a loan, legally, is next to impossible. I have heard this tactic mentioned several times but can not find any details on how or even if it's possible outside of an FHA or VA loan.
Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes
3y
@Chris Raniere call the lender who has the note and ask if it is assumable. Thats the best way. Search title records and the originating lender may be listed. Call them and find out. Or ask the current note holder for the mortgage statement, call the lender based on the loan number and ask.
Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes
3y
@Chris Raniere call the lender who has the note and ask if it is assumable. Thats the best way. Search title records and the originating lender may be listed. Call them and find out. Or ask the current note holder for the mortgage statement, call the lender based on the loan number and ask.
I would say 95% of Conventional loans are not assumable. Frankly, I don't even know why people are going that direction anyway. If you have a seller that is filling to let someone to assume a loan, why would you go and through the hoops of getting approved ( Credit Pull, Documentation ). Just take over the current loan through Sub2. No credit, bank statements and credentials needed.
Not true, some lenders allow for a loan assumption. You want to avoid this liability, shoot for subto
Unless desperate, why would a seller do a Subto? Honest question, as it seems like such a risk to hope the new buyer makes the payments. Otherwise the seller’s credit is at a major risk right? If I were a seller I might consider a wrap around instead to at least offset risk a little. https://www.thebalancemoney.co.... Link to a post about Subto and wrap around mortgages.
We have a potential deal "on paper" where we would take over a conventional loan from a failed flipper. People are telling us that assuming a loan, legally, is next to impossible. I have heard this tactic mentioned several times but can not find any details on how or even if it's possible outside of an FHA or VA loan.
Any insight? Thanks!
Most conventional loans are not assumable but you can look at the note as it would tell you there. Or as the other person said you can call the lender and ask.
Not true, some lenders allow for a loan assumption. You want to avoid this liability, shoot for subto
Unless desperate, why would a seller do a Subto? Honest question, as it seems like such a risk to hope the new buyer makes the payments. Otherwise the seller’s credit is at a major risk right? If I were a seller I might consider a wrap around instead to at least offset risk a little. https://www.thebalancemoney.co.... Link to a post about Subto and wrap around mortgages.
It repairs the sellers credit, and in most cases the sellers are in distressed situations.
Not true, some lenders allow for a loan assumption. You want to avoid this liability, shoot for subto
Unless desperate, why would a seller do a Subto? Honest question, as it seems like such a risk to hope the new buyer makes the payments. Otherwise the seller’s credit is at a major risk right? If I were a seller I might consider a wrap around instead to at least offset risk a little. https://www.thebalancemoney.co.... Link to a post about Subto and wrap around mortgages.
thanks Matt! In this case I was hoping the seller was in a jam and I was in fact considering an assumption not a subject to. The article was helpful, appreciate your response.
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
3y
Failed flipper is likely behind on loan, has forced place insurance. Get written authorization from seller and copy of mortgage bill, and promissory note. You need to know exactly what the story is...
The lender who originally did the loan is not in charge of anything- the trustee(s) who own the note are. Current servicer probably will not take your call.
Subject to with seller in financial trouble adds risk to you as a buyer- insurance risk, acceleration risk, unknown other pending lawsuits/ BK/ unpaid...