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Updated about 1 month ago on . Most recent reply

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Sam German
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Question on Sub-to Plausibility

Sam German
Posted

Everything I've read says that most mortgages have a due-on-sale clause or something else that prevents Sub-to from being an option. Are people just ignoring that and hoping the servicer doesn't call the loan due?

Are the odds in your favor if you take this risk? 

I'm very new to this topic. 

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Don Konipol
#4 All Forums Contributor
  • Lender
  • The Woodlands, TX
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Don Konipol
#4 All Forums Contributor
  • Lender
  • The Woodlands, TX
Replied
Quote from @Sam German:

Everything I've read says that most mortgages have a due-on-sale clause or something else that prevents Sub-to from being an option. Are people just ignoring that and hoping the servicer doesn't call the loan due?

Are the odds in your favor if you take this risk? 

I'm very new to this topic. 

Up until now most mortgage loans were NOT accelerated when property was transferred subject to because
1. In generally declining interest rates the lender has no incentive to replace a performing note with investment in a lower interest rates note
2. It was time consuming and expensive to monitor every deed recording of a large mortgage portfolio.

Now with rising interest rates and on line deed recording information it would appear that lenders may be a lot more aggressive in enforcing the “due on sale” clause inherent in almost every mortgage or deed of trust written in the last 40 years. 

  • Don Konipol
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Private Mortgage Financing Partners, LLC

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