Subject-To Madness, Not Sure of Options

2 Replies

Hey BP, question for you. I bought a house that was a subject to deal. The owner still had an active mortgage on the property which I have been paying since taking ownership. My issue is the previous owner just contacted me and let me know that she was going to file bankruptcy. I know that the bank most likely will not allow me to assume the loan since my cash reserves are low and I don't show very much income. This property is in Indiana. I am not aware of any DSCR lenders in the area. There is a ton of equity in the property, Value is around $180k, mortgage balance is $70k. Any ideas on how to proceed? Thanks

Originally posted by @Kyle Russell :

Hey BP, question for you. I bought a house that was a subject to deal. The owner still had an active mortgage on the property which I have been paying since taking ownership. My issue is the previous owner just contacted me and let me know that she was going to file bankruptcy. I know that the bank most likely will not allow me to assume the loan since my cash reserves are low and I don't show very much income. This property is in Indiana. I am not aware of any DSCR lenders in the area. There is a ton of equity in the property, Value is around $180k, mortgage balance is $70k. Any ideas on how to proceed? Thanks

That is a very complicated situation. Hopefully you used an attorney or escrow company and did the transaction properly and recorded the warranty deed. If not, you need a bankruptcy attorney to sort things out for you. If you did it properly you need a real estate attorney to protect your interests. 

Yes, everything was recorded properly and transferred. Looks like I will need to reach out to my real estate attorney. Hopefully, I can protect myself on this one. Thanks for the reply!

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