Subject two purchases

9 Replies

I have been thinking about doing subject two purchases. My question is can I offer to take over the existing mortgage and try to work out with the bank to bring the loan current if it is scheduled to be auctioned off by the bank in the next few weeks or months?

If so can I offer to work with the current homeowner rent the house to them so they don't fully lose their home?

@Shawn G Hope : You are at the mercy of the bank with this one.  I would get a hold of a decision maker at the bank before paying out any money.

I looked into a similar situation earlier this year and I found that if the homeowner cannot pay the mortgage then I did not think he would be able to pay rent.  What does renting back to the homeowner do to them psychologically - they now rent the house they could not pay for?  I don't know... I am just throwing it out there.

Originally posted by @Anthony McEvoy :

@Shawn G Hope: You are at the mercy of the bank with this one.  I would get a hold of a decision maker at the bank before paying out any money.

I looked into a similar situation earlier this year and I found that if the homeowner cannot pay the mortgage then I did not think he would be able to pay rent.  What does renting back to the homeowner do to them psychologically - they now rent the house they could not pay for?  I don't know... I am just throwing it out there.

 I understand the bank will be one of the bigger obstacles. 

I'm thinking that some people like a few that I have known in my life have had something big come up and have gotten behind on their mortgage and not been able to get caught back up. I would actually sit down with the homeowner and go over bills and income to verify they can afford it that way they do have the option or maybe it gets them out of this negative mark on their credit so they can move on with their lives. 

Originally posted by @Shawn G Hope :

I have been thinking about doing subject two purchases. My question is can I offer to take over the existing mortgage and try to work out with the bank to bring the loan current if it is scheduled to be auctioned off by the bank in the next few weeks or months?

If so can I offer to work with the current homeowner rent the house to them so they don't fully lose their home?

Yes, if you are an attorney, mortgage broker or real estate agent. Otherwise, you'd probably be in violation of the Loan Modification/blah blah blah laws. You used to be able to do that, but a bunch of people went crazy and did stupid stuff and now it is highly regulated.

What you can do though, is bring the loan current first, THEN take over the loan Subject To. That is safer.

(Forget about negotiating with the bank if you want to take the loan Subject To. They will simply call the loan due and cut you out of the deal. You won't get your money back that you used to bring the loan current. Kiss that money good bye.)

If you are doing a Short Sale and have cash, they might discuss it. But in a Subject To they are not losing any money so no negotiation is accepted. 

And I suggest you NEVER rent back a property to the seller, I know people do that, but it is "pure stupid". It confuses the transaction and more than a few times the "good guy" who helped the seller save his house got sued after the fact. The reality is, once you have solved their problem, you are no longer their "friend" you are a greedy, unwashed investor who took advantage of them and they now have an attorney who is willing to take you to court to get their property back. It is safer to buy a 5 gallon can of gasoline and toss matches at it to pretend it's the 4th of July. Don't do that either. That is "back country stupid". Either one is stupid. Oh, did I say stupid? No offense. Nothing personal. This isn't meant for you personally. This is for all the people out there who will read this in the next downturn in the economy, probably about 2019 and think chasing foreclosures is a good thing. You seem like a nice guy wanting to help people. The courts just don't care about that. I've been doing this for a very long time and I've seen it all, multiple times.

Chase "off market" deals instead. They are cheaper, safer, legal, and you are less likely to be sued or investigated.

Originally posted by Account Closed:
Originally posted by @Shawn G Hope:

I have been thinking about doing subject two purchases. My question is can I offer to take over the existing mortgage and try to work out with the bank to bring the loan current if it is scheduled to be auctioned off.....

Thank you very much for your input! 

I hadn't put any thought into people's actual behavior. Just like the people the "fall" in the local grocery store and sue because they are to stupid and selfish to read a wet floor sign. 

Like you said after you have solved their problem you can become the person that "screwed" them over. So I will completely scratch the renting it to the home owner and save that headache. 

What are your thoughts on offering to do a subject to purchase with paying to catch up their mortgage? That way their credit gets a little boost and remove the foreclosure on their credit so they could move on with their lives.  Also with the properties I have looked at would be well under market value. I would have to get more information from the homeowner to find out what is past due and what their current mortgage is to make sure it would still be a good deal. 

Originally posted by @Shawn G Hope :
Originally posted by @Mike M.:
Originally posted by @Shawn G Hope:

I have been thinking about doing subject two purchases. My question is can I offer to take over the existing mortgage and try to work out with the bank to bring the loan current if it is scheduled to be auctioned off.....

Thank you very much for your input! 

I hadn't put any thought into people's actual behavior. Just like the people the "fall" in the local grocery store and sue because they are to stupid and selfish to read a wet floor sign. 

Like you said after you have solved their problem you can become the person that "screwed" them over. So I will completely scratch the renting it to the home owner and save that headache. 

What are your thoughts on offering to do a subject to purchase with paying to catch up their mortgage? That way their credit gets a little boost and remove the foreclosure on their credit so they could move on with their lives.  Also with the properties I have looked at would be well under market value. I would have to get more information from the homeowner to find out what is past due and what their current mortgage is to make sure it would still be a good deal. 

 That works. In fact it is a common enough technique. Stay away from Washington where it is against the law to approach anyone who is in pre-foreclosure. There were another couple of states to stay away from (I can't remember which, do a search) but in most of the country it helps the homeowner and is perfectly acceptable. Always get a title report, close using an attorney or escrow company and have the seller sign a disclosure sheet that they know what they are doing, that they are selling their house, aren't drunk or on drugs, it is your intention to make a profit, this is not a loan, and have that signed in front of the closing attorney.

Originally posted by Account Closed:
Originally posted by @Shawn G Hope:
Originally posted by Account Closed:
Originally posted by @Shawn G Hope:

I have been thinking about doing subject two purchases. My question is can I offer to take over the existing mortgage and try to work out with the bank to bring the loan current if it is scheduled to be auctioned off.....

Thank you very much for your input! 

I hadn't put any thought into people's actual behavior. Just like the people the "fall" in the local grocery store and sue because they are to stupid and selfish to read a wet floor sign. 

Like you said after you have solved their problem you can become the person that "screwed" them over. So I will completely scratch the renting it to the home owner and save that headache. 

What are your thoughts on offering to do a subject to purchase with paying to catch up their mortgage? That way their credit gets a little boost and remove the foreclosure on their credit so they could move on with their lives.  Also with the properties I have looked at would be well under market value. I would have to get more information from the homeowner to find out what is past due and what their current mortgage is to make sure it would still be a good deal. 

 That works. In fact it is a common enough technique. Stay away from Washington where it is against the law to approach anyone who is in pre-foreclosure. There were another couple of states to stay away from (I can't remember which, do a search) but in most of the country it helps the homeowner and is perfectly acceptable. Always get a title report, close using an attorney or escrow company and have the seller sign a disclosure sheet that they know what they are doing, that they are selling their house, aren't drunk or on drugs, it is your intention to make a profit, this is not a loan, and have that signed in front of the closing attorney.

 Well I guess my goal for the next few weeks is to make some good connections in a few title companies. 

Again thank you so much Account Closed You have given me some great ideas and cleared some fog that could have been very painful(renting to the homeowner)  

Originally posted by @Shawn G Hope :
Originally posted by @Mike M.:
Originally posted by @Shawn G Hope:
Originally posted by @Mike M.:
Originally posted by @Shawn G Hope:

I have been thinking about doing subject two purchases. My question is can I offer to take over the existing mortgage and try to work out with the bank to bring the loan current if it is scheduled to be auctioned off.....

Thank you very much for your input! 

I hadn't put any thought into people's actual behavior. Just like the people the "fall" in the local grocery store and sue because they are to stupid and selfish to read a wet floor sign. 

Like you said after you have solved their problem you can become the person that "screwed" them over. So I will completely scratch the renting it to the home owner and save that headache. 

What are your thoughts on offering to do a subject to purchase with paying to catch up their mortgage? That way their credit gets a little boost and remove the foreclosure on their credit so they could move on with their lives.  Also with the properties I have looked at would be well under market value. I would have to get more information from the homeowner to find out what is past due and what their current mortgage is to make sure it would still be a good deal. 

 That works. In fact it is a common enough technique. Stay away from Washington where it is against the law to approach anyone who is in pre-foreclosure. There were another couple of states to stay away from (I can't remember which, do a search) but in most of the country it helps the homeowner and is perfectly acceptable. Always get a title report, close using an attorney or escrow company and have the seller sign a disclosure sheet that they know what they are doing, that they are selling their house, aren't drunk or on drugs, it is your intention to make a profit, this is not a loan, and have that signed in front of the closing attorney.

 Well I guess my goal for the next few weeks is to make some good connections in a few title companies. 

Again thank you so much @Mike M. You have given me some great ideas and cleared some fog that could have been very painful(renting to the homeowner)  

 You are obviously a 'giver" not a taker. If there is anything I can explain to make it easier for you, feel free to ask.If there is a Greatwest Title in your area, they are the best and can help, if not try Chicago Title.

Originally posted by Account Closed:
Originally posted by @Shawn G Hope:
Originally posted by @Account Closed :
Originally posted by @Shawn G Hope:

I have been thinking about doing subject two purchases. My question is can I offer to take over the existing mortgage and try to work out with the bank to bring the loan current if it is scheduled to be auctioned off.....

Thank you very much for your input! 

I hadn't put any thought into people's actual behavior. Just like the people the "fall" in the local grocery store and sue because they are to stupid and selfish to read a wet floor sign. 

Like you said after you have solved their problem you can become the person that "screwed" them over. So I will completely scratch the renting it to the home owner and save that headache. 

What are your thoughts on offering to do a subject to purchase with paying to catch up their mortgage? That way their credit gets a little boost and remove the foreclosure on their credit so they could move on with their lives.  Also with the properties I have looked at would be well under market value. I would have to get more information from the homeowner to find out what is past due and what their current mortgage is to make sure it would still be a good deal. 

 That works. In fact it is a common enough technique. Stay away from Washington where it is against the law to approach anyone who is in pre-foreclosure. There were another couple of states to stay away from (I can't remember which, do a search) but in most of the country it helps the homeowner and is perfectly acceptable. Always get a title report, close using an attorney or escrow company and have the seller sign a disclosure sheet that they know what they are doing, that they are selling their house, aren't drunk or on drugs, it is your intention to make a profit, this is not a loan, and have that signed in front of the closing attorney.

 Well I guess my goal for the next few weeks is to make some good connections in a few title companies. 

Again thank you so much @Mike M. You have given me some great ideas and cleared some fog that could have been very painful(renting to the homeowner)  

 You are obviously a 'giver" not a taker. If there is anything I can explain to make it easier for you, feel free to ask.If there is a Greatwest Title in your area, they are the best and can help, if not try Chicago Title.

 Those names haven't come up on any searches I have done so far. I will keep doing research. If I am ever in Paradise Valley, Arizona or you are ever in the Colorado Springs, Colorado I owe you a beer or two. 

Correction I found Chicago Title. I will be making a call tomorrow.