No More 'Subject To' Transactions
Houston, TX · Member since 2015 · 29 posts · 10 votes
I just received an email from Phil and Shenoah Grove requesting investors to join forces and fight against a bill being proposed to legislation which will effectively STOP investors, buyers and sellers ability to purchase or sell properties 'subject-to the existing mortgage via a wrap around mortgage here in Texas. The bill is SB 1993, 1994 & 1995. They are asking for donations to help them fight this. If you know them, please contact them to get more information on how to donate and offer additional services to stop legislation from passing this bill? As we all know, there are always those that will not use this strategy to defraud buyers and sellers but for the most part, I want to believe more of us are doing these transactions the right way.
Thank you.
Sharon
Yes, Yes, Yes let's do like Jay suggests and take away Subject To and let people figure out how to sell when there is no equity and we will see lots and lots of new foreclosures again! Yes! Let's all make lots of money on foreclosures instead of providing a "steam release" for stressed sellers. Who the heck cares about the seller anyway. They deserve to lose their property and credit because we can't provide Subject To. They were stupid to take out a loan in the first place.
The next thing we should do is regulate HML guys like Jay who lends, so that fix & flippers have to qualify at Chase or Goldman Sachs. In too many markets the HML crooks far outweigh the good guys in this and this practice needs to be stopped.
While we are at it, why don't we ban cars because one guy in Portland was too slow crossing the street and got hit by one.
It's like using a sledge hammer to remove a sliver.
Lets be fair here. If we were the lender, 99.99% of use would want to prohibit the original borrower we qualified from being able to transfer their obligation to someone we did not know, did not qualify, etc. If you are the homeowner and cannot make your payment and have little equity, why should you get the ability to transfer your obligation to someone who may be in a worse situation than you. I have purchased subject to and I did everything I promised the seller. With that being said, if it were outlawed, I wouldn't lose any sleep over it. You can't borrow money from other people and make all the rules too.
Please take a moment to lend your support to the cause that will positively affect all of us! Eddie Speed and others have created this coalition of investors to demonstrate to the US Congress how many of us there are supporting our lobbyist(s) in DC. In order for our opinions to be heard, we must join together and support this effort.
Please click the link below, get caught up on current legislation that will positively reform Dodd Frank without harming those it was designed to protect. IfHR 1360 is not passed, Owner/Seller Financing would be greatly impacted causing harm to those facing foreclosure that needs a way out of their situation as well as those who cannot qualify for a traditional loan and want to own a home.
THIS WILL DIRECTLY IMPACT YOUR EXIT STRATEGY OPTIONS!
http://www.sellerfinancecoalition.org/
Please JOIN us in support of this coalition! If you choose not to join, feel free to use the letter below to alert your state representatives about this cause.
CONTACT YOUR CONGRESSMAN
Find your member of Congress using the link below:
And tell them to support HR 1360:The Seller Finance Enhancement Actusing the provided letter:
“I am proud to re-introduce the Seller Finance Enhancement Act of 2016; a bill that will help small business owners fight unnecessary regulation and continued federal overreach. While the cost of mortgage loan origination has increased dramatically since the financial meltdown, seller financiers continue to fill an important void in the national housing market, while allowing many American’s to realize the dream of homeownership.”
- Congressman Roger Williams (TX-25) Sponsor of HR 1360
@Martin Zagrzejewski , @Account Closed
@Vern Darlington, what just happened? The OP wrote:- "Phil and Shenoah Grove requesting investors to join forces and fight AGAINST a bill"..., but you wrote:- "If HR 1360 is not passed, Owner/Seller Financing would be greatly impacted causing harm"...
Are we talking about the same bill, or mutually exclusive bills? [I admit - bill/s not read by me].
Either way, I still don't reckon newbies should be sucked into this debate, especially financially!...
1. In Texas selling "subject-to" is not illegal. There is no statute prohibiting it. It may be a default under the deed of trust, and a breach of contract between lender and borrower which allows the lender to accelerate the balance of the loan secured by the Deed of Trust.
2. I have never known of a big bank lender accelerate a residential loan as a result of the owner deeding the property to another person (as in a subject to transaction or a wraparound). ive been in the real estate business since 1995.
3. Legislation that would make such a conveyance "illegal" is an erosion of property owners rights and likely those of the lenders (I have not read the proposed legislation). Real estate has been strong for just long enough for many investors to have never known, or have forgotten, how important such transactions are in poor economic times.
4. I close subject-to and wraparounds for investors and sellers with zero money and those that are very well funded. As long as the parties are informed, and accept the risks, there is no reason willing participants should not be allowed to convey property with an existing lien. It is just another tool in the buyers toolbox and an option for a seller who may prefer to carry a note and profit from the spread between the underlying lien and the Wraparound Note.
5. The seller should get a Deed of Trust to Secure Performance, or other mechanism depending on the state in which the property is located, allowing them to foreclose if the buyer defaults.
6. No one should attempt to buy or sell subject-to without consulting an attorney who is experienced in closing these transactions.
7. In Texas, such a transaction may require a statutory notice (which includes details concerning the underlying loan) given by seller to buyer and a statutory waiting period between the date the contract is executed and the date the transaction can be closed.
8. Don't take legal advice from strangers on the internet who are from a different state of the US. This includes me. Real estate laws vary by state. If your property is in Texas, get advice from someone with experience specific to Texas law.
The first house I ever owned, I bought subject-to. It was a blessing for me as a 22 year old kid with no money, and a blessing for the seller who was exasperated with the property and the tenant and wanted to never deal with the property or the tenant ever again.
You all need to take into consideration that the Groves business model is structured teaching real estate strategies fundamentally based not he subject to and wrap models. If the bill is passed, their model will simply collapse, and the false expectations created by teaching how to became rich doing real estate transactions with no money or credit will have to be reconsidered.
That is the great catch of their event, that anybody, with none of their money, no credit and no experience can simply talk some going to foreclosure into transferring the property to them, with the expectation that they will attend the payments.
All experienced investors know about the horror stories that exist around the subject to and wraps, people not making payments, unscrupulous investors asking for money for the reinstatement and keeping it, etc., It is true that maybe is only 1%-2% of the occasions, but it causes enough damage to need proper regulation.
The Groves have created a big business on real estate education with a very efficient assembly line that keeps continuously dumping unexperienced investors to the marketplace that focus, pretty much exclusively on subject to deals. Their meetings are mostly dedicated to subject to examples and cases, as well as their masterminds.
If the bill is passed, the Groves will be in a very delicate position if they want to continue teaching the way the do, and, therefore, they have ALL THE INTEREST IN THE WORLD to oppose the bill. I would be doing the same if I were them. It is just that I am not like them at all, and I consider that the protection of people and consumer comes before the interest of a handful of inexperienced investors, that they do not even make a proper living out of it.
I know very well what I am talking about because I am also one of Phill Grove's Big Dog Group member.
@Kenneth Johnson If the Subject To goes south, the seller can foreclose and get the property back or it can deeded back to the seller "in lieu".
Is it possible to make a contract that if the Sub 2 buyer didn't make a payment, than contract would be canceled and has no any rights for the property?
Sorry for my poor English, still learning.
@ Such a great fight here. I am a fan of Sub 2 ( didn't make any deals yet), but gaining all the possible info for last 8 month while operating my transportation company. First of all I was against your posts (I thought that you just made enough money and now against sub 2 because you got many less risky options) , than I start to understand what you mean and I agree, any one who doing sub 2 need financials, to get of out of the trouble ( like evictions, non payments, property damage, !!!!!due-on-sale clause!!!!!).
I think that buying Sub 2 with little or no equity is not stupid if you have a plan and back up plan. I think it might be done in emerging markets, appreciation game, but YES it's very risky and you need exit strategies that won't hurt seller.
I will try to obtain properties by sub 2, cause I have no enough taxes paid to qualify for a loan that I want, but I have a family member and friend (investor) who have couple of M$ and trust me.
@Yanis P. Yes, that is how the contract is set up.
Hi Everyone,
So what if as an investor/buyer you approach the seller and offer to do a payoff in full before it goes to auction? Then no harm no foul right? As a buyer you get your investment property and the seller doesn't get screwed right? (I'm a newbie and trying to learn)
@Chris Moulton, then that would be the topic for a different thread.
ie. "Sub to" infers that the Investor doesn't want to (or can't) pay out the loan up front. Cheers...
@Ellis San Jose If you own the property out right you have the right and if it is finance the lender has the final say if they allow a subject to
That is exactly why I am ok with the terms of the contract & expect the lender to follow the rules as well to cure a breach. I have no problem with that. It is not illegal it is a breach of contract to change title & the remedies are spelled out very clearly. The lender has rights to enforce a cure as a lender & I have a rights as an owner. There is a distinction.