Just Closed "Subject To" have some questions, will to pay for consult.

New to Real Estate · Port Huron, MI · Member since 2017 · 26 posts · 5 votes

Closed on a Sub2 in Michigan last week. I'm now on title, seller is still the borrower. My plan is to just keep the property for good. I've done plenty of deals as a former agent, but this is my first Sub2 on my own property, and a few things that popped up after closing pushed me into a deep-dive on worst-case scenarios. Now I want sanity checks from people who actually operate Sub2s in the real world—not guru scripts.

I have enough to pay off loan now and have current pay offs ready to go for the next couple weeks, so, now that I’m on title and this isn’t some flim flam guru crap I’m considering just paying it all off. Although, I am not sure that’s wise unless or if I am forced to do so considering how long my capital would be locked up for.

Power of Attorney:
The POA my title attorney drafted is basically worthless; it terminates when the deed transfers, so it doesn't survive closing. That made me look harder at whether a POA even matters. From what I've found, once the deed is recorded I count as a successor-in-interest. Wells Fargo has to give me access to payoff and reinstatement amounts, and I can reinstate or pay off without needing the seller. For those who've actually done Sub2 in Michigan: do you even bother with POAs, or is that more of a guru artifact?

Seller cooperation:
I initially assumed I'd need the Seller for anything involving the loan. From what I'm seeing, that's wrong. As the titled owner, I can reinstate, pay off, or even redeem the property if it ever went to sheriff's sale. Michigan law allows anyone "claiming under the mortgagor" to redeem, which seems to cover me. Has anyone here actually reinstated or paid off without the seller involved? As of now our plan is for me to log into his account and pay the PITI myself.

Insurance and Escrow:

I went ahead and got insurance in my name with the mortgagor as Wells Fargo with the correct loan number, so, it is insured. The insurer sent Wells a copy. Wells did just call the mortgagee yesterday, he couldn’t answer so we are not sure what about, my guess would be the change in insurance. I’d like to have him cancel his escrow, get his money back and that way I can just pay principal and interest to Wells Fargo and worry about taxes and insurance on my own.

Due-on-sale risk:
This one feels mostly theoretical. It's a straight person-to-person Sub2—no LLC, no delinquency, insurance handled correctly, not messing with escrow. Anyone here ever had Wells Fargo actually call a DOS on a clean deal like that? I'd like to cancel the escrow, get the seller his few grand in there, and just pay Princiapl and Interest to Wells Fargo.

Foreclosure & protecting equity:

I always assumed that if a Sub2 goes sideways and the lender forecloses, I lose all my equity. Multiple attorneys told me that's not how Michigan works. If the property sells at sheriff's sale above what's owed, the surplus goes to the titled owner. And even if it sells low, I still have the 6-month redemption window. So if WF forecloses and bidding hits, say, $90k on a $62k payoff—do I realistically walk with the surplus? Anyone lived this process?

Where I’m actually at:
I’m not nervous about real estate generally; I just hate relying on a seller for anything. When I map it out, a lot has to go wrong for me to actually lose money: WF calls the loan, I can’t refinance or pay it off, seller doesn’t cooperate, foreclosure goes the full distance, the sale price is low, and I don’t redeem. That’s a long string of failures, but I want to make sure my understanding is accurate.

My questions for the BP veterans:

Does a POA really matter on a Michigan Sub2?
Has anyone reinstated or paid off without the seller?
Any actual DOS calls from Wells Fargo on a clean Sub2?
In Michigan, does the titled owner really get the surplus after the sheriff's sale?
Is there any realistic way to lose all equity if payments stay current?

Would appreciate input from people who've actually run multiple Sub2 deals—especially in Michigan or with Wells Fargo. I'm trying to cut through the noise and get the real story.

I also appreciate just how much of a fad thing this is. It has been such a challenge to find attorneys, title companies and the like who have any idea what a subject to deal is. Thanks!

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Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

10mo

Quote from @Iain A.:

Quote from @Jay Hinrichs:

Quote from @Iain A.:

Quote from @Drew Sygit:

POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.

- will the seller sign a new one?
- I you have POA, you dn't need seller cooperation.

LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.

Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.

You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.

Yes, Michigan law requires surplus to go to owner.

Interesting, the few instances of due on sale clause being executed that I could find involved transferring to single member LLC's. As you see it, what benefit is there to the bank of having an informal assumption under and LLC vs an individual?

None of the insurance companies I spoke with would allow such a configuration for insurance. Besides, how is that any less likely to invite scrutiny when there's still an additional person on there? Moreover, as long as the mortgagee and the loan number match as insured parties how would three entities over two be preferred by the lender in the event of a claim? Never mind that the former owner now has no claim to title.

Your points are not valid. Are you a bot?

what are you worried about.. if the loan is called refi or pay it off simple as that.. that is the downside risk of sub to and what any sub to buyer needs to understand and be ready to do in the fairly rare event that a loan gets called.. I had it happen twice we just stroke the check and pay it off thats after about 200 sub to's i did personally.

Drew is a real person I dont think he is a bot / robot.

As for what I am worried about - mostly highly granular and unlikely scenarios which is why I came here. I also don't want to pay PITI when I could just pay P and I while taxes build up in an escrow account with his name on it lol. This is therefore to say many little details.

You are correct, I could and will just pay it off if it comes down to it though this requires proper notice. This is why I was asking about sherriff sales, foreclosure, yadda yadda. I can obviate issues with proper notice with a thorough understanding of the process.

So, I am a traveler. Therefore, I use a virtual mailbox service. My virtual mailbox service will not accept mail from someone else without their consent. The seller is extremely busy and I haven't had time to run the USPS form passed him and am not sure he should or would trust me with the level of authorization required to receive his statements as USPS Policy requiers access to recive all mail in their name, just not single pieces. If it were me, I wouldn't be cool with that.

I could use someone else in town though this poses potential risks. So, this is one failure point: receiving notice should my access to his online mortgage account be compromised.

If the seller gets incapacitated or something like that happens and I lose access to his account where I am making payments then I'd also be unable to receive notice of any action from the bank if my tenants didn't tell me there were notices coming.

This is my first deal and I do not want to mess up the sellers credit, have to deal with any foreclosure proceedings, have my tenants have to move randomly, ect. I have found it exceedingly difficult to find people who even know what Sub2 is, so, I appreciate you coming on and saying as much. I figured coming here to figure all this out would be a good place to start.

As for paid training, most guru's are crap. I checked out Pace Morby but couldn't find a link to pay him or his team for a half hour consult. I also don't have the time to vet him and make sure he's as point as every other guru claims they are.

I appreciate your help. I am trying to understand every, little, tiny last detail and point of failure. This is what I have always done. This post and answers will help others as time goes on. The amount of crap out there regarding Sub2, as well as the attitudes of other people towards it and those that employ the technique, is genuinely staggering.

Your questions have reached the point of being where you’re not (in my opinion) going to be able to receive answers you have confidence in on BP forum - you’re going to have to engage the services of legal counsel specializing in Michigan real estate law. It would probably be well worth it for your peace of mind to do so, and something unexpected may turn up that suggests a simple solution that satisfies your concerns.

Beyond that - 2 other things

First, all real estate investment has risk - but after a certain point the risk is too small to justify the worry or expense of taking a “counter” action. Only experience will teach you when that point is reached in any given deal.

Second, there’s absolutely nothing to be gained by “attacking” a responding poster. Even if (in your opinion) the responder made an incorrect assumption, or comes off sounding harsh, a much better approach is to just state the facts - and why they may be incorrect. Personal attacks and counter attacks often escalate to the point where any benefit (other than “entertainment” is totally lost.

Private Mortgage Financing Partners, LLC

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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
10mo
POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.
- will the seller sign a new one?
- I you have POA, you dn't need seller cooperation.
LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.
Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.
You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.
Yes, Michigan law requires surplus to go to owner.

[email protected]248-209-6824
Logical Property Management4.9460 Reviews
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4 Reply
- Iain A.
  OP
  New to Real Estate · Port Huron, MI · Member since 2017 · 26 posts · 5 votes
  10mo
  Quote from @Drew Sygit:
  
  POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.
  - will the seller sign a new one?
  - I you have POA, you dn't need seller cooperation.
  LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.
  Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.
  You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.
  Yes, Michigan law requires surplus to go to owner.
  
  Interesting, the few instances of due on sale clause being executed that I could find involved transferring to single member LLC's. As you see it, what benefit is there to the bank of having an informal assumption under and LLC vs an individual?
  
  None of the insurance companies I spoke with would allow such a configuration for insurance. Besides, how is that any less likely to invite scrutiny when there's still an additional person on there? Moreover, as long as the mortgagee and the loan number match as insured parties how would three entities over two be preferred by the lender in the event of a claim? Never mind that the former owner now has no claim to title.
  
  Your points are not valid. Are you a bot?
  
  0 Reply
- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  10mo
  Quote from @Iain A.:
  
  Quote from @Drew Sygit:
  
  POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.
  - will the seller sign a new one?
  - I you have POA, you dn't need seller cooperation.
  LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.
  Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.
  You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.
  Yes, Michigan law requires surplus to go to owner.
  
  Interesting, the few instances of due on sale clause being executed that I could find involved transferring to single member LLC's. As you see it, what benefit is there to the bank of having an informal assumption under and LLC vs an individual?
  
  None of the insurance companies I spoke with would allow such a configuration for insurance. Besides, how is that any less likely to invite scrutiny when there's still an additional person on there? Moreover, as long as the mortgagee and the loan number match as insured parties how would three entities over two be preferred by the lender in the event of a claim? Never mind that the former owner now has no claim to title.
  
  Your points are not valid. Are you a bot?
  
  what are you worried about.. if the loan is called refi or pay it off simple as that.. that is the downside risk of sub to and what any sub to buyer needs to understand and be ready to do in the fairly rare event that a loan gets called.. I had it happen twice we just stroke the check and pay it off thats after about 200 sub to's i did personally.
  
  Drew is a real person I dont think he is a bot / robot.
  Podcast Guest on Show #222
  JLH Capital Partners51 Review
  Website View Page
  2 Reply
- Iain A.
  OP
  New to Real Estate · Port Huron, MI · Member since 2017 · 26 posts · 5 votes
  10mo
  Quote from @Jay Hinrichs:
  
  Quote from @Iain A.:
  
  Quote from @Drew Sygit:
  
  POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.
  - will the seller sign a new one?
  - I you have POA, you dn't need seller cooperation.
  LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.
  Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.
  You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.
  Yes, Michigan law requires surplus to go to owner.
  
  Interesting, the few instances of due on sale clause being executed that I could find involved transferring to single member LLC's. As you see it, what benefit is there to the bank of having an informal assumption under and LLC vs an individual?
  
  None of the insurance companies I spoke with would allow such a configuration for insurance. Besides, how is that any less likely to invite scrutiny when there's still an additional person on there? Moreover, as long as the mortgagee and the loan number match as insured parties how would three entities over two be preferred by the lender in the event of a claim? Never mind that the former owner now has no claim to title.
  
  Your points are not valid. Are you a bot?
  
  what are you worried about.. if the loan is called refi or pay it off simple as that.. that is the downside risk of sub to and what any sub to buyer needs to understand and be ready to do in the fairly rare event that a loan gets called.. I had it happen twice we just stroke the check and pay it off thats after about 200 sub to's i did personally.
  
  Drew is a real person I dont think he is a bot / robot.
  
  ah cool, thank you for the clarification. Would you mind going over what happened in those two instances that lead to the loan being called due? Also, do you typically cancel the sellers escrow? I had several insurance agents tell me they couldn't charge his escrow for a policy that's just me and the lender.
  0 Reply
- Iain A.
  OP
  New to Real Estate · Port Huron, MI · Member since 2017 · 26 posts · 5 votes
  10mo
  Quote from @Jay Hinrichs:
  
  Quote from @Iain A.:
  
  Quote from @Drew Sygit:
  
  POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.
  - will the seller sign a new one?
  - I you have POA, you dn't need seller cooperation.
  LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.
  Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.
  You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.
  Yes, Michigan law requires surplus to go to owner.
  
  Interesting, the few instances of due on sale clause being executed that I could find involved transferring to single member LLC's. As you see it, what benefit is there to the bank of having an informal assumption under and LLC vs an individual?
  
  None of the insurance companies I spoke with would allow such a configuration for insurance. Besides, how is that any less likely to invite scrutiny when there's still an additional person on there? Moreover, as long as the mortgagee and the loan number match as insured parties how would three entities over two be preferred by the lender in the event of a claim? Never mind that the former owner now has no claim to title.
  
  Your points are not valid. Are you a bot?
  
  what are you worried about.. if the loan is called refi or pay it off simple as that.. that is the downside risk of sub to and what any sub to buyer needs to understand and be ready to do in the fairly rare event that a loan gets called.. I had it happen twice we just stroke the check and pay it off thats after about 200 sub to's i did personally.
  
  Drew is a real person I dont think he is a bot / robot.
  
  As for what I am worried about - mostly highly granular and unlikely scenarios which is why I came here. I also don't want to pay PITI when I could just pay P and I while taxes build up in an escrow account with his name on it lol. This is therefore to say many little details.
  You are correct, I could and will just pay it off if it comes down to it though this requires proper notice. This is why I was asking about sherriff sales, foreclosure, yadda yadda. I can obviate issues with proper notice with a thorough understanding of the process.
  So, I am a traveler. Therefore, I use a virtual mailbox service. My virtual mailbox service will not accept mail from someone else without their consent. The seller is extremely busy and I haven't had time to run the USPS form passed him and am not sure he should or would trust me with the level of authorization required to receive his statements as USPS Policy requiers access to recive all mail in their name, just not single pieces. If it were me, I wouldn't be cool with that.
  I could use someone else in town though this poses potential risks. So, this is one failure point: receiving notice should my access to his online mortgage account be compromised.
  If the seller gets incapacitated or something like that happens and I lose access to his account where I am making payments then I'd also be unable to receive notice of any action from the bank if my tenants didn't tell me there were notices coming.
  This is my first deal and I do not want to mess up the sellers credit, have to deal with any foreclosure proceedings, have my tenants have to move randomly, ect. I have found it exceedingly difficult to find people who even know what Sub2 is, so, I appreciate you coming on and saying as much. I figured coming here to figure all this out would be a good place to start.
  As for paid training, most guru's are crap. I checked out Pace Morby but couldn't find a link to pay him or his team for a half hour consult. I also don't have the time to vet him and make sure he's as point as every other guru claims they are.
  
  I appreciate your help. I am trying to understand every, little, tiny last detail and point of failure. This is what I have always done. This post and answers will help others as time goes on. The amount of crap out there regarding Sub2, as well as the attitudes of other people towards it and those that employ the technique, is genuinely staggering.
  0 Reply
- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  10mo
  Quote from @Iain A.:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Iain A.:
  
  Quote from @Drew Sygit:
  
  POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.
  - will the seller sign a new one?
  - I you have POA, you dn't need seller cooperation.
  LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.
  Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.
  You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.
  Yes, Michigan law requires surplus to go to owner.
  
  Interesting, the few instances of due on sale clause being executed that I could find involved transferring to single member LLC's. As you see it, what benefit is there to the bank of having an informal assumption under and LLC vs an individual?
  
  None of the insurance companies I spoke with would allow such a configuration for insurance. Besides, how is that any less likely to invite scrutiny when there's still an additional person on there? Moreover, as long as the mortgagee and the loan number match as insured parties how would three entities over two be preferred by the lender in the event of a claim? Never mind that the former owner now has no claim to title.
  
  Your points are not valid. Are you a bot?
  
  what are you worried about.. if the loan is called refi or pay it off simple as that.. that is the downside risk of sub to and what any sub to buyer needs to understand and be ready to do in the fairly rare event that a loan gets called.. I had it happen twice we just stroke the check and pay it off thats after about 200 sub to's i did personally.
  
  Drew is a real person I dont think he is a bot / robot.
  
  As for what I am worried about - mostly highly granular and unlikely scenarios which is why I came here. I also don't want to pay PITI when I could just pay P and I while taxes build up in an escrow account with his name on it lol. This is therefore to say many little details.
  You are correct, I could and will just pay it off if it comes down to it though this requires proper notice. This is why I was asking about sherriff sales, foreclosure, yadda yadda. I can obviate issues with proper notice with a thorough understanding of the process.
  So, I am a traveler. Therefore, I use a virtual mailbox service. My virtual mailbox service will not accept mail from someone else without their consent. The seller is extremely busy and I haven't had time to run the USPS form passed him and am not sure he should or would trust me with the level of authorization required to receive his statements as USPS Policy requiers access to recive all mail in their name, just not single pieces. If it were me, I wouldn't be cool with that.
  I could use someone else in town though this poses potential risks. So, this is one failure point: receiving notice should my access to his online mortgage account be compromised.
  If the seller gets incapacitated or something like that happens and I lose access to his account where I am making payments then I'd also be unable to receive notice of any action from the bank if my tenants didn't tell me there were notices coming.
  This is my first deal and I do not want to mess up the sellers credit, have to deal with any foreclosure proceedings, have my tenants have to move randomly, ect. I have found it exceedingly difficult to find people who even know what Sub2 is, so, I appreciate you coming on and saying as much. I figured coming here to figure all this out would be a good place to start.
  As for paid training, most guru's are crap. I checked out Pace Morby but couldn't find a link to pay him or his team for a half hour consult. I also don't have the time to vet him and make sure he's as point as every other guru claims they are.
  
  I appreciate your help. I am trying to understand every, little, tiny last detail and point of failure. This is what I have always done. This post and answers will help others as time goes on. The amount of crap out there regarding Sub2, as well as the attitudes of other people towards it and those that employ the technique, is genuinely staggering.
  
  keep in mind by the time you get a default notice your sellers credit will already be trashed.
  Podcast Guest on Show #222
  JLH Capital Partners51 Review
  Website View Page
  1 Reply
- Don KonipolBusiness Member
  Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
  10mo
  Quote from @Iain A.:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Iain A.:
  
  Quote from @Drew Sygit:
  
  POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.
  - will the seller sign a new one?
  - I you have POA, you dn't need seller cooperation.
  LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.
  Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.
  You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.
  Yes, Michigan law requires surplus to go to owner.
  
  Interesting, the few instances of due on sale clause being executed that I could find involved transferring to single member LLC's. As you see it, what benefit is there to the bank of having an informal assumption under and LLC vs an individual?
  
  None of the insurance companies I spoke with would allow such a configuration for insurance. Besides, how is that any less likely to invite scrutiny when there's still an additional person on there? Moreover, as long as the mortgagee and the loan number match as insured parties how would three entities over two be preferred by the lender in the event of a claim? Never mind that the former owner now has no claim to title.
  
  Your points are not valid. Are you a bot?
  
  what are you worried about.. if the loan is called refi or pay it off simple as that.. that is the downside risk of sub to and what any sub to buyer needs to understand and be ready to do in the fairly rare event that a loan gets called.. I had it happen twice we just stroke the check and pay it off thats after about 200 sub to's i did personally.
  
  Drew is a real person I dont think he is a bot / robot.
  
  As for what I am worried about - mostly highly granular and unlikely scenarios which is why I came here. I also don't want to pay PITI when I could just pay P and I while taxes build up in an escrow account with his name on it lol. This is therefore to say many little details.
  You are correct, I could and will just pay it off if it comes down to it though this requires proper notice. This is why I was asking about sherriff sales, foreclosure, yadda yadda. I can obviate issues with proper notice with a thorough understanding of the process.
  So, I am a traveler. Therefore, I use a virtual mailbox service. My virtual mailbox service will not accept mail from someone else without their consent. The seller is extremely busy and I haven't had time to run the USPS form passed him and am not sure he should or would trust me with the level of authorization required to receive his statements as USPS Policy requiers access to recive all mail in their name, just not single pieces. If it were me, I wouldn't be cool with that.
  I could use someone else in town though this poses potential risks. So, this is one failure point: receiving notice should my access to his online mortgage account be compromised.
  If the seller gets incapacitated or something like that happens and I lose access to his account where I am making payments then I'd also be unable to receive notice of any action from the bank if my tenants didn't tell me there were notices coming.
  This is my first deal and I do not want to mess up the sellers credit, have to deal with any foreclosure proceedings, have my tenants have to move randomly, ect. I have found it exceedingly difficult to find people who even know what Sub2 is, so, I appreciate you coming on and saying as much. I figured coming here to figure all this out would be a good place to start.
  As for paid training, most guru's are crap. I checked out Pace Morby but couldn't find a link to pay him or his team for a half hour consult. I also don't have the time to vet him and make sure he's as point as every other guru claims they are.
  
  I appreciate your help. I am trying to understand every, little, tiny last detail and point of failure. This is what I have always done. This post and answers will help others as time goes on. The amount of crap out there regarding Sub2, as well as the attitudes of other people towards it and those that employ the technique, is genuinely staggering.
  Your questions have reached the point of being where you’re not (in my opinion) going to be able to receive answers you have confidence in on BP forum - you’re going to have to engage the services of legal counsel specializing in Michigan real estate law. It would probably be well worth it for your peace of mind to do so, and something unexpected may turn up that suggests a simple solution that satisfies your concerns.
  
  Beyond that - 2 other things
  
  First, all real estate investment has risk - but after a certain point the risk is too small to justify the worry or expense of taking a “counter” action. Only experience will teach you when that point is reached in any given deal.
  
  Second, there’s absolutely nothing to be gained by “attacking” a responding poster. Even if (in your opinion) the responder made an incorrect assumption, or comes off sounding harsh, a much better approach is to just state the facts - and why they may be incorrect. Personal attacks and counter attacks often escalate to the point where any benefit (other than “entertainment” is totally lost.
  
  Private Mortgage Financing Partners, LLC
  Website View Page
  4 Reply
- Jason Eyerly
  Real Estate Agent · Charleston, SC · Member since 2013 · 424 posts · 99 votes
  9mo
  Quote from @Iain A.:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Iain A.:
  
  Quote from @Drew Sygit:
  
  POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.
  - will the seller sign a new one?
  - I you have POA, you dn't need seller cooperation.
  LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.
  Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.
  You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.
  Yes, Michigan law requires surplus to go to owner.
  
  Interesting, the few instances of due on sale clause being executed that I could find involved transferring to single member LLC's. As you see it, what benefit is there to the bank of having an informal assumption under and LLC vs an individual?
  
  None of the insurance companies I spoke with would allow such a configuration for insurance. Besides, how is that any less likely to invite scrutiny when there's still an additional person on there? Moreover, as long as the mortgagee and the loan number match as insured parties how would three entities over two be preferred by the lender in the event of a claim? Never mind that the former owner now has no claim to title.
  
  Your points are not valid. Are you a bot?
  
  what are you worried about.. if the loan is called refi or pay it off simple as that.. that is the downside risk of sub to and what any sub to buyer needs to understand and be ready to do in the fairly rare event that a loan gets called.. I had it happen twice we just stroke the check and pay it off thats after about 200 sub to's i did personally.
  
  Drew is a real person I dont think he is a bot / robot.
  
  As for what I am worried about - mostly highly granular and unlikely scenarios which is why I came here. I also don't want to pay PITI when I could just pay P and I while taxes build up in an escrow account with his name on it lol. This is therefore to say many little details.
  You are correct, I could and will just pay it off if it comes down to it though this requires proper notice. This is why I was asking about sherriff sales, foreclosure, yadda yadda. I can obviate issues with proper notice with a thorough understanding of the process.
  So, I am a traveler. Therefore, I use a virtual mailbox service. My virtual mailbox service will not accept mail from someone else without their consent. The seller is extremely busy and I haven't had time to run the USPS form passed him and am not sure he should or would trust me with the level of authorization required to receive his statements as USPS Policy requiers access to recive all mail in their name, just not single pieces. If it were me, I wouldn't be cool with that.
  I could use someone else in town though this poses potential risks. So, this is one failure point: receiving notice should my access to his online mortgage account be compromised.
  If the seller gets incapacitated or something like that happens and I lose access to his account where I am making payments then I'd also be unable to receive notice of any action from the bank if my tenants didn't tell me there were notices coming.
  This is my first deal and I do not want to mess up the sellers credit, have to deal with any foreclosure proceedings, have my tenants have to move randomly, ect. I have found it exceedingly difficult to find people who even know what Sub2 is, so, I appreciate you coming on and saying as much. I figured coming here to figure all this out would be a good place to start.
  As for paid training, most guru's are crap. I checked out Pace Morby but couldn't find a link to pay him or his team for a half hour consult. I also don't have the time to vet him and make sure he's as point as every other guru claims they are.
  
  I appreciate your help. I am trying to understand every, little, tiny last detail and point of failure. This is what I have always done. This post and answers will help others as time goes on. The amount of crap out there regarding Sub2, as well as the attitudes of other people towards it and those that employ the technique, is genuinely staggering.
  
  Once upon a time these forums and many BP property methods of purchasing a home were pure gold. When I first joined in 2014. I think Gen Z has made its way on here with Ai and brought it down a bit but there's still some good content to be found. Meetups are my theoretical way of filtering out the trash. Only determined folks will actually go to a networking event. I just bought William Tingles "12 House Blueprint" from a Facebook ad at 3AM and was curious the plausability of this approach. I make great money, I have good credit, and recently bought my first home (dad's house from probate) with a conventional to save my FHA for a multifamily house hack but want to scale beyond that so this seemed appealing. When I have $70k saved again it's going towards an SBA7(a) loan for a turnkey business that'll have a 200% COC return.
  Would love to connect and pick your brain about a new guy hitting the ground running and your experiences if you don't mind. Maybe Ken gets unbanned and we can bug him.
  0 Reply
- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  9mo
  Quote from @Jason Eyerly:
  
  Quote from @Iain A.:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Iain A.:
  
  Quote from @Drew Sygit:
  
  POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.
  - will the seller sign a new one?
  - I you have POA, you dn't need seller cooperation.
  LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.
  Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.
  You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.
  Yes, Michigan law requires surplus to go to owner.
  
  Interesting, the few instances of due on sale clause being executed that I could find involved transferring to single member LLC's. As you see it, what benefit is there to the bank of having an informal assumption under and LLC vs an individual?
  
  None of the insurance companies I spoke with would allow such a configuration for insurance. Besides, how is that any less likely to invite scrutiny when there's still an additional person on there? Moreover, as long as the mortgagee and the loan number match as insured parties how would three entities over two be preferred by the lender in the event of a claim? Never mind that the former owner now has no claim to title.
  
  Your points are not valid. Are you a bot?
  
  what are you worried about.. if the loan is called refi or pay it off simple as that.. that is the downside risk of sub to and what any sub to buyer needs to understand and be ready to do in the fairly rare event that a loan gets called.. I had it happen twice we just stroke the check and pay it off thats after about 200 sub to's i did personally.
  
  Drew is a real person I dont think he is a bot / robot.
  
  As for what I am worried about - mostly highly granular and unlikely scenarios which is why I came here. I also don't want to pay PITI when I could just pay P and I while taxes build up in an escrow account with his name on it lol. This is therefore to say many little details.
  You are correct, I could and will just pay it off if it comes down to it though this requires proper notice. This is why I was asking about sherriff sales, foreclosure, yadda yadda. I can obviate issues with proper notice with a thorough understanding of the process.
  So, I am a traveler. Therefore, I use a virtual mailbox service. My virtual mailbox service will not accept mail from someone else without their consent. The seller is extremely busy and I haven't had time to run the USPS form passed him and am not sure he should or would trust me with the level of authorization required to receive his statements as USPS Policy requiers access to recive all mail in their name, just not single pieces. If it were me, I wouldn't be cool with that.
  I could use someone else in town though this poses potential risks. So, this is one failure point: receiving notice should my access to his online mortgage account be compromised.
  If the seller gets incapacitated or something like that happens and I lose access to his account where I am making payments then I'd also be unable to receive notice of any action from the bank if my tenants didn't tell me there were notices coming.
  This is my first deal and I do not want to mess up the sellers credit, have to deal with any foreclosure proceedings, have my tenants have to move randomly, ect. I have found it exceedingly difficult to find people who even know what Sub2 is, so, I appreciate you coming on and saying as much. I figured coming here to figure all this out would be a good place to start.
  As for paid training, most guru's are crap. I checked out Pace Morby but couldn't find a link to pay him or his team for a half hour consult. I also don't have the time to vet him and make sure he's as point as every other guru claims they are.
  
  I appreciate your help. I am trying to understand every, little, tiny last detail and point of failure. This is what I have always done. This post and answers will help others as time goes on. The amount of crap out there regarding Sub2, as well as the attitudes of other people towards it and those that employ the technique, is genuinely staggering.
  
  Once upon a time these forums and many BP property methods of purchasing a home were pure gold. When I first joined in 2014. I think Gen Z has made its way on here with Ai and brought it down a bit but there's still some good content to be found. Meetups are my theoretical way of filtering out the trash. Only determined folks will actually go to a networking event. I just bought William Tingles "12 House Blueprint" from a Facebook ad at 3AM and was curious the plausability of this approach. I make great money, I have good credit, and recently bought my first home (dad's house from probate) with a conventional to save my FHA for a multifamily house hack but want to scale beyond that so this seemed appealing. When I have $70k saved again it's going towards an SBA7(a) loan for a turnkey business that'll have a 200% COC return.
  Would love to connect and pick your brain about a new guy hitting the ground running and your experiences if you don't mind. Maybe Ken gets unbanned and we can bug him.
  
  I see Ken posting this weekend so he is around.. from what I have gleaned he charges 15k for his training.. whether you can buy an hour of his time I am dont know. One thing I do know though is you can make some good money as a realtor in Charleston if you sell my new build at 6 F street just hit the market I would appreciate it a ton if you were to bring in a good buyer.!!! :)
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  2 Reply
- Ken M.
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  9mo
  Quote from @Jason Eyerly:
  
  Quote from @Iain A.:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Iain A.:
  
  Quote from @Drew Sygit:
  
  @Steve K.:
  
  POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.
  - will the seller sign a new one?
  - I you have POA, you dn't need seller cooperation.
  LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.
  Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.
  You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.
  Yes, Michigan law requires surplus to go to owner.
  
  Interesting, the few instances of due on sale clause being executed that I could find involved transferring to single member LLC's. As you see it, what benefit is there to the bank of having an informal assumption under and LLC vs an individual?
  
  None of the insurance companies I spoke with would allow such a configuration for insurance. Besides, how is that any less likely to invite scrutiny when there's still an additional person on there? Moreover, as long as the mortgagee and the loan number match as insured parties how would three entities over two be preferred by the lender in the event of a claim? Never mind that the former owner now has no claim to title.
  
  Your points are not valid. Are you a bot?
  
  what are you worried about.. if the loan is called refi or pay it off simple as that.. that is the downside risk of sub to and what any sub to buyer needs to understand and be ready to do in the fairly rare event that a loan gets called.. I had it happen twice we just stroke the check and pay it off thats after about 200 sub to's i did personally.
  
  Drew is a real person I dont think he is a bot / robot.
  
  As for what I am worried about - mostly highly granular and unlikely scenarios which is why I came here. I also don't want to pay PITI when I could just pay P and I while taxes build up in an escrow account with his name on it lol. This is therefore to say many little details.
  You are correct, I could and will just pay it off if it comes down to it though this requires proper notice. This is why I was asking about sherriff sales, foreclosure, yadda yadda. I can obviate issues with proper notice with a thorough understanding of the process.
  So, I am a traveler. Therefore, I use a virtual mailbox service. My virtual mailbox service will not accept mail from someone else without their consent. The seller is extremely busy and I haven't had time to run the USPS form passed him and am not sure he should or would trust me with the level of authorization required to receive his statements as USPS Policy requiers access to recive all mail in their name, just not single pieces. If it were me, I wouldn't be cool with that.
  I could use someone else in town though this poses potential risks. So, this is one failure point: receiving notice should my access to his online mortgage account be compromised.
  If the seller gets incapacitated or something like that happens and I lose access to his account where I am making payments then I'd also be unable to receive notice of any action from the bank if my tenants didn't tell me there were notices coming.
  This is my first deal and I do not want to mess up the sellers credit, have to deal with any foreclosure proceedings, have my tenants have to move randomly, ect. I have found it exceedingly difficult to find people who even know what Sub2 is, so, I appreciate you coming on and saying as much. I figured coming here to figure all this out would be a good place to start.
  As for paid training, most guru's are crap. I checked out Pace Morby but couldn't find a link to pay him or his team for a half hour consult. I also don't have the time to vet him and make sure he's as point as every other guru claims they are.
  
  I appreciate your help. I am trying to understand every, little, tiny last detail and point of failure. This is what I have always done. This post and answers will help others as time goes on. The amount of crap out there regarding Sub2, as well as the attitudes of other people towards it and those that employ the technique, is genuinely staggering.
  
  Once upon a time these forums and many BP property methods of purchasing a home were pure gold. When I first joined in 2014. I think Gen Z has made its way on here with Ai and brought it down a bit but there's still some good content to be found. Meetups are my theoretical way of filtering out the trash. Only determined folks will actually go to a networking event. I just bought William Tingles "12 House Blueprint" from a Facebook ad at 3AM and was curious the plausability of this approach. I make great money, I have good credit, and recently bought my first home (dad's house from probate) with a conventional to save my FHA for a multifamily house hack but want to scale beyond that so this seemed appealing. When I have $70k saved again it's going towards an SBA7(a) loan for a turnkey business that'll have a 200% COC return.
  Would love to connect and pick your brain about a new guy hitting the ground running and your experiences if you don't mind. Maybe Ken gets unbanned and we can bug him.
  
  I'm still here. I've just been very busy buying. End of year rush.
  @Jay Hinrichs: said it best a few posts back "you can give all the advice you want, but getting a thank you in return is unlikely" slightly paraphrased ;-) Well, actually a major paraphrase, but you get the idea.
  I like @Don Konipol: s point. I have little confidence you set it up correctly, so it's best to let an attorney take a look at it. Not that an attorney will help you set it up correctly, but he may be able to keep you from getting sued. As for Wells Fargo calling the DOS, in my 30 years the two I've had called were by Wells. One went to court (I won) but it was a huge distraction and went on for years. It was appealed each time I won at that level. They finally gave up after the Appellate court ruling. I learned a LOT of legal though through the process.
  0 Reply
- Iain A.
  OP
  New to Real Estate · Port Huron, MI · Member since 2017 · 26 posts · 5 votes
  9mo
  Quote from @Jay Hinrichs:
  
  Quote from @Iain A.:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Iain A.:
  
  Quote from @Drew Sygit:
  
  POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.
  - will the seller sign a new one?
  - I you have POA, you dn't need seller cooperation.
  LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.
  Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.
  You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.
  Yes, Michigan law requires surplus to go to owner.
  
  Interesting, the few instances of due on sale clause being executed that I could find involved transferring to single member LLC's. As you see it, what benefit is there to the bank of having an informal assumption under and LLC vs an individual?
  
  None of the insurance companies I spoke with would allow such a configuration for insurance. Besides, how is that any less likely to invite scrutiny when there's still an additional person on there? Moreover, as long as the mortgagee and the loan number match as insured parties how would three entities over two be preferred by the lender in the event of a claim? Never mind that the former owner now has no claim to title.
  
  Your points are not valid. Are you a bot?
  
  what are you worried about.. if the loan is called refi or pay it off simple as that.. that is the downside risk of sub to and what any sub to buyer needs to understand and be ready to do in the fairly rare event that a loan gets called.. I had it happen twice we just stroke the check and pay it off thats after about 200 sub to's i did personally.
  
  Drew is a real person I dont think he is a bot / robot.
  
  As for what I am worried about - mostly highly granular and unlikely scenarios which is why I came here. I also don't want to pay PITI when I could just pay P and I while taxes build up in an escrow account with his name on it lol. This is therefore to say many little details.
  You are correct, I could and will just pay it off if it comes down to it though this requires proper notice. This is why I was asking about sherriff sales, foreclosure, yadda yadda. I can obviate issues with proper notice with a thorough understanding of the process.
  So, I am a traveler. Therefore, I use a virtual mailbox service. My virtual mailbox service will not accept mail from someone else without their consent. The seller is extremely busy and I haven't had time to run the USPS form passed him and am not sure he should or would trust me with the level of authorization required to receive his statements as USPS Policy requiers access to recive all mail in their name, just not single pieces. If it were me, I wouldn't be cool with that.
  I could use someone else in town though this poses potential risks. So, this is one failure point: receiving notice should my access to his online mortgage account be compromised.
  If the seller gets incapacitated or something like that happens and I lose access to his account where I am making payments then I'd also be unable to receive notice of any action from the bank if my tenants didn't tell me there were notices coming.
  This is my first deal and I do not want to mess up the sellers credit, have to deal with any foreclosure proceedings, have my tenants have to move randomly, ect. I have found it exceedingly difficult to find people who even know what Sub2 is, so, I appreciate you coming on and saying as much. I figured coming here to figure all this out would be a good place to start.
  As for paid training, most guru's are crap. I checked out Pace Morby but couldn't find a link to pay him or his team for a half hour consult. I also don't have the time to vet him and make sure he's as point as every other guru claims they are.
  
  I appreciate your help. I am trying to understand every, little, tiny last detail and point of failure. This is what I have always done. This post and answers will help others as time goes on. The amount of crap out there regarding Sub2, as well as the attitudes of other people towards it and those that employ the technique, is genuinely staggering.
  
  keep in mind by the time you get a default notice your sellers credit will already be trashed.
  
  Why is this worth mentioning when it should be obvious that my intent here is finding out all the ways to avoid this from happening. On top of that, why assume the seller has/had good credit to begin with?
  0 Reply
- Iain A.
  OP
  New to Real Estate · Port Huron, MI · Member since 2017 · 26 posts · 5 votes
  9mo
  Quote from @Don Konipol:
  
  Quote from @Iain A.:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Iain A.:
  
  Quote from @Drew Sygit:
  
  POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.
  - will the seller sign a new one?
  - I you have POA, you dn't need seller cooperation.
  LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.
  Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.
  You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.
  Yes, Michigan law requires surplus to go to owner.
  
  Interesting, the few instances of due on sale clause being executed that I could find involved transferring to single member LLC's. As you see it, what benefit is there to the bank of having an informal assumption under and LLC vs an individual?
  
  None of the insurance companies I spoke with would allow such a configuration for insurance. Besides, how is that any less likely to invite scrutiny when there's still an additional person on there? Moreover, as long as the mortgagee and the loan number match as insured parties how would three entities over two be preferred by the lender in the event of a claim? Never mind that the former owner now has no claim to title.
  
  Your points are not valid. Are you a bot?
  
  what are you worried about.. if the loan is called refi or pay it off simple as that.. that is the downside risk of sub to and what any sub to buyer needs to understand and be ready to do in the fairly rare event that a loan gets called.. I had it happen twice we just stroke the check and pay it off thats after about 200 sub to's i did personally.
  
  Drew is a real person I dont think he is a bot / robot.
  
  As for what I am worried about - mostly highly granular and unlikely scenarios which is why I came here. I also don't want to pay PITI when I could just pay P and I while taxes build up in an escrow account with his name on it lol. This is therefore to say many little details.
  You are correct, I could and will just pay it off if it comes down to it though this requires proper notice. This is why I was asking about sherriff sales, foreclosure, yadda yadda. I can obviate issues with proper notice with a thorough understanding of the process.
  So, I am a traveler. Therefore, I use a virtual mailbox service. My virtual mailbox service will not accept mail from someone else without their consent. The seller is extremely busy and I haven't had time to run the USPS form passed him and am not sure he should or would trust me with the level of authorization required to receive his statements as USPS Policy requiers access to recive all mail in their name, just not single pieces. If it were me, I wouldn't be cool with that.
  I could use someone else in town though this poses potential risks. So, this is one failure point: receiving notice should my access to his online mortgage account be compromised.
  If the seller gets incapacitated or something like that happens and I lose access to his account where I am making payments then I'd also be unable to receive notice of any action from the bank if my tenants didn't tell me there were notices coming.
  This is my first deal and I do not want to mess up the sellers credit, have to deal with any foreclosure proceedings, have my tenants have to move randomly, ect. I have found it exceedingly difficult to find people who even know what Sub2 is, so, I appreciate you coming on and saying as much. I figured coming here to figure all this out would be a good place to start.
  As for paid training, most guru's are crap. I checked out Pace Morby but couldn't find a link to pay him or his team for a half hour consult. I also don't have the time to vet him and make sure he's as point as every other guru claims they are.
  
  I appreciate your help. I am trying to understand every, little, tiny last detail and point of failure. This is what I have always done. This post and answers will help others as time goes on. The amount of crap out there regarding Sub2, as well as the attitudes of other people towards it and those that employ the technique, is genuinely staggering.
  Your questions have reached the point of being where you’re not (in my opinion) going to be able to receive answers you have confidence in on BP forum - you’re going to have to engage the services of legal counsel specializing in Michigan real estate law. It would probably be well worth it for your peace of mind to do so, and something unexpected may turn up that suggests a simple solution that satisfies your concerns.
  
  Beyond that - 2 other things
  
  First, all real estate investment has risk - but after a certain point the risk is too small to justify the worry or expense of taking a “counter” action. Only experience will teach you when that point is reached in any given deal.
  
  Second, there’s absolutely nothing to be gained by “attacking” a responding poster. Even if (in your opinion) the responder made an incorrect assumption, or comes off sounding harsh, a much better approach is to just state the facts - and why they may be incorrect. Personal attacks and counter attacks often escalate to the point where any benefit (other than “entertainment” is totally lost.
  
  I'm not sure there's much to be gained from the BP Forum here in either case as so many of the people who responded either used AI, barely knew what they were talking about, projected some wierdo emotional concern troll nonsense, hardly seemed to be able to type coherent sentences at all even if the above weren't of concern. Anyway, what made you think for a second I was interested in your feedback on online conduct?
  
  0 Reply
- Iain A.
  OP
  New to Real Estate · Port Huron, MI · Member since 2017 · 26 posts · 5 votes
  9mo
  Quote from @Ken M.:
  
  Quote from @Jason Eyerly:
  
  Quote from @Iain A.:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Iain A.:
  
  Quote from @Drew Sygit:
  
  @Steve K.:
  
  POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.
  - will the seller sign a new one?
  - I you have POA, you dn't need seller cooperation.
  LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.
  Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.
  You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.
  Yes, Michigan law requires surplus to go to owner.
  
  Interesting, the few instances of due on sale clause being executed that I could find involved transferring to single member LLC's. As you see it, what benefit is there to the bank of having an informal assumption under and LLC vs an individual?
  
  None of the insurance companies I spoke with would allow such a configuration for insurance. Besides, how is that any less likely to invite scrutiny when there's still an additional person on there? Moreover, as long as the mortgagee and the loan number match as insured parties how would three entities over two be preferred by the lender in the event of a claim? Never mind that the former owner now has no claim to title.
  
  Your points are not valid. Are you a bot?
  
  what are you worried about.. if the loan is called refi or pay it off simple as that.. that is the downside risk of sub to and what any sub to buyer needs to understand and be ready to do in the fairly rare event that a loan gets called.. I had it happen twice we just stroke the check and pay it off thats after about 200 sub to's i did personally.
  
  Drew is a real person I dont think he is a bot / robot.
  
  As for what I am worried about - mostly highly granular and unlikely scenarios which is why I came here. I also don't want to pay PITI when I could just pay P and I while taxes build up in an escrow account with his name on it lol. This is therefore to say many little details.
  You are correct, I could and will just pay it off if it comes down to it though this requires proper notice. This is why I was asking about sherriff sales, foreclosure, yadda yadda. I can obviate issues with proper notice with a thorough understanding of the process.
  So, I am a traveler. Therefore, I use a virtual mailbox service. My virtual mailbox service will not accept mail from someone else without their consent. The seller is extremely busy and I haven't had time to run the USPS form passed him and am not sure he should or would trust me with the level of authorization required to receive his statements as USPS Policy requiers access to recive all mail in their name, just not single pieces. If it were me, I wouldn't be cool with that.
  I could use someone else in town though this poses potential risks. So, this is one failure point: receiving notice should my access to his online mortgage account be compromised.
  If the seller gets incapacitated or something like that happens and I lose access to his account where I am making payments then I'd also be unable to receive notice of any action from the bank if my tenants didn't tell me there were notices coming.
  This is my first deal and I do not want to mess up the sellers credit, have to deal with any foreclosure proceedings, have my tenants have to move randomly, ect. I have found it exceedingly difficult to find people who even know what Sub2 is, so, I appreciate you coming on and saying as much. I figured coming here to figure all this out would be a good place to start.
  As for paid training, most guru's are crap. I checked out Pace Morby but couldn't find a link to pay him or his team for a half hour consult. I also don't have the time to vet him and make sure he's as point as every other guru claims they are.
  
  I appreciate your help. I am trying to understand every, little, tiny last detail and point of failure. This is what I have always done. This post and answers will help others as time goes on. The amount of crap out there regarding Sub2, as well as the attitudes of other people towards it and those that employ the technique, is genuinely staggering.
  
  Once upon a time these forums and many BP property methods of purchasing a home were pure gold. When I first joined in 2014. I think Gen Z has made its way on here with Ai and brought it down a bit but there's still some good content to be found. Meetups are my theoretical way of filtering out the trash. Only determined folks will actually go to a networking event. I just bought William Tingles "12 House Blueprint" from a Facebook ad at 3AM and was curious the plausability of this approach. I make great money, I have good credit, and recently bought my first home (dad's house from probate) with a conventional to save my FHA for a multifamily house hack but want to scale beyond that so this seemed appealing. When I have $70k saved again it's going towards an SBA7(a) loan for a turnkey business that'll have a 200% COC return.
  Would love to connect and pick your brain about a new guy hitting the ground running and your experiences if you don't mind. Maybe Ken gets unbanned and we can bug him.
  
  I'm still here. I've just been very busy buying. End of year rush.
  @Jay Hinrichs: said it best a few posts back "you can give all the advice you want, but getting a thank you in return is unlikely" slightly paraphrased ;-) Well, actually a major paraphrase, but you get the idea.
  I like @Don Konipol: s point. I have little confidence you set it up correctly, so it's best to let an attorney take a look at it. Not that an attorney will help you set it up correctly, but he may be able to keep you from getting sued. As for Wells Fargo calling the DOS, in my 30 years the two I've had called were by Wells. One went to court (I won) but it was a huge distraction and went on for years. It was appealed each time I won at that level. They finally gave up after the Appellate court ruling. I learned a LOT of legal though through the process.
  
  Thanks man, appreciate the input!
  0 Reply
- Iain A.
  OP
  New to Real Estate · Port Huron, MI · Member since 2017 · 26 posts · 5 votes
  9mo
  Quote from @Ken M.:
  
  Quote from @Jason Eyerly:
  
  Quote from @Iain A.:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Iain A.:
  
  Quote from @Drew Sygit:
  
  @Steve K.:
  
  POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.
  - will the seller sign a new one?
  - I you have POA, you dn't need seller cooperation.
  LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.
  Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.
  You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.
  Yes, Michigan law requires surplus to go to owner.
  
  Interesting, the few instances of due on sale clause being executed that I could find involved transferring to single member LLC's. As you see it, what benefit is there to the bank of having an informal assumption under and LLC vs an individual?
  
  None of the insurance companies I spoke with would allow such a configuration for insurance. Besides, how is that any less likely to invite scrutiny when there's still an additional person on there? Moreover, as long as the mortgagee and the loan number match as insured parties how would three entities over two be preferred by the lender in the event of a claim? Never mind that the former owner now has no claim to title.
  
  Your points are not valid. Are you a bot?
  
  what are you worried about.. if the loan is called refi or pay it off simple as that.. that is the downside risk of sub to and what any sub to buyer needs to understand and be ready to do in the fairly rare event that a loan gets called.. I had it happen twice we just stroke the check and pay it off thats after about 200 sub to's i did personally.
  
  Drew is a real person I dont think he is a bot / robot.
  
  As for what I am worried about - mostly highly granular and unlikely scenarios which is why I came here. I also don't want to pay PITI when I could just pay P and I while taxes build up in an escrow account with his name on it lol. This is therefore to say many little details.
  You are correct, I could and will just pay it off if it comes down to it though this requires proper notice. This is why I was asking about sherriff sales, foreclosure, yadda yadda. I can obviate issues with proper notice with a thorough understanding of the process.
  So, I am a traveler. Therefore, I use a virtual mailbox service. My virtual mailbox service will not accept mail from someone else without their consent. The seller is extremely busy and I haven't had time to run the USPS form passed him and am not sure he should or would trust me with the level of authorization required to receive his statements as USPS Policy requiers access to recive all mail in their name, just not single pieces. If it were me, I wouldn't be cool with that.
  I could use someone else in town though this poses potential risks. So, this is one failure point: receiving notice should my access to his online mortgage account be compromised.
  If the seller gets incapacitated or something like that happens and I lose access to his account where I am making payments then I'd also be unable to receive notice of any action from the bank if my tenants didn't tell me there were notices coming.
  This is my first deal and I do not want to mess up the sellers credit, have to deal with any foreclosure proceedings, have my tenants have to move randomly, ect. I have found it exceedingly difficult to find people who even know what Sub2 is, so, I appreciate you coming on and saying as much. I figured coming here to figure all this out would be a good place to start.
  As for paid training, most guru's are crap. I checked out Pace Morby but couldn't find a link to pay him or his team for a half hour consult. I also don't have the time to vet him and make sure he's as point as every other guru claims they are.
  
  I appreciate your help. I am trying to understand every, little, tiny last detail and point of failure. This is what I have always done. This post and answers will help others as time goes on. The amount of crap out there regarding Sub2, as well as the attitudes of other people towards it and those that employ the technique, is genuinely staggering.
  
  Once upon a time these forums and many BP property methods of purchasing a home were pure gold. When I first joined in 2014. I think Gen Z has made its way on here with Ai and brought it down a bit but there's still some good content to be found. Meetups are my theoretical way of filtering out the trash. Only determined folks will actually go to a networking event. I just bought William Tingles "12 House Blueprint" from a Facebook ad at 3AM and was curious the plausability of this approach. I make great money, I have good credit, and recently bought my first home (dad's house from probate) with a conventional to save my FHA for a multifamily house hack but want to scale beyond that so this seemed appealing. When I have $70k saved again it's going towards an SBA7(a) loan for a turnkey business that'll have a 200% COC return.
  Would love to connect and pick your brain about a new guy hitting the ground running and your experiences if you don't mind. Maybe Ken gets unbanned and we can bug him.
  
  I'm still here. I've just been very busy buying. End of year rush.
  @Jay Hinrichs: said it best a few posts back "you can give all the advice you want, but getting a thank you in return is unlikely" slightly paraphrased ;-) Well, actually a major paraphrase, but you get the idea.
  I like @Don Konipol: s point. I have little confidence you set it up correctly, so it's best to let an attorney take a look at it. Not that an attorney will help you set it up correctly, but he may be able to keep you from getting sued. As for Wells Fargo calling the DOS, in my 30 years the two I've had called were by Wells. One went to court (I won) but it was a huge distraction and went on for years. It was appealed each time I won at that level. They finally gave up after the Appellate court ruling. I learned a LOT of legal though through the process.
  
  Do you happen to have the court records handy? I'd love to pour over them. I called many attorneys, they were not helpful, we're talking close to 30 and maybe 2 or 3 had any idea what a Sub2 was - not by that name either.
  It's $62k left on the mortgage, I will pay it off or sell the house if they call it due.
  0 Reply
- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  9mo
  Quote from @Iain A.:
  
  Quote from @Don Konipol:
  
  Quote from @Iain A.:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Iain A.:
  
  Quote from @Drew Sygit:
  
  POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.
  - will the seller sign a new one?
  - I you have POA, you dn't need seller cooperation.
  LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.
  Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.
  You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.
  Yes, Michigan law requires surplus to go to owner.
  
  Interesting, the few instances of due on sale clause being executed that I could find involved transferring to single member LLC's. As you see it, what benefit is there to the bank of having an informal assumption under and LLC vs an individual?
  
  None of the insurance companies I spoke with would allow such a configuration for insurance. Besides, how is that any less likely to invite scrutiny when there's still an additional person on there? Moreover, as long as the mortgagee and the loan number match as insured parties how would three entities over two be preferred by the lender in the event of a claim? Never mind that the former owner now has no claim to title.
  
  Your points are not valid. Are you a bot?
  
  what are you worried about.. if the loan is called refi or pay it off simple as that.. that is the downside risk of sub to and what any sub to buyer needs to understand and be ready to do in the fairly rare event that a loan gets called.. I had it happen twice we just stroke the check and pay it off thats after about 200 sub to's i did personally.
  
  Drew is a real person I dont think he is a bot / robot.
  
  As for what I am worried about - mostly highly granular and unlikely scenarios which is why I came here. I also don't want to pay PITI when I could just pay P and I while taxes build up in an escrow account with his name on it lol. This is therefore to say many little details.
  You are correct, I could and will just pay it off if it comes down to it though this requires proper notice. This is why I was asking about sherriff sales, foreclosure, yadda yadda. I can obviate issues with proper notice with a thorough understanding of the process.
  So, I am a traveler. Therefore, I use a virtual mailbox service. My virtual mailbox service will not accept mail from someone else without their consent. The seller is extremely busy and I haven't had time to run the USPS form passed him and am not sure he should or would trust me with the level of authorization required to receive his statements as USPS Policy requiers access to recive all mail in their name, just not single pieces. If it were me, I wouldn't be cool with that.
  I could use someone else in town though this poses potential risks. So, this is one failure point: receiving notice should my access to his online mortgage account be compromised.
  If the seller gets incapacitated or something like that happens and I lose access to his account where I am making payments then I'd also be unable to receive notice of any action from the bank if my tenants didn't tell me there were notices coming.
  This is my first deal and I do not want to mess up the sellers credit, have to deal with any foreclosure proceedings, have my tenants have to move randomly, ect. I have found it exceedingly difficult to find people who even know what Sub2 is, so, I appreciate you coming on and saying as much. I figured coming here to figure all this out would be a good place to start.
  As for paid training, most guru's are crap. I checked out Pace Morby but couldn't find a link to pay him or his team for a half hour consult. I also don't have the time to vet him and make sure he's as point as every other guru claims they are.
  
  I appreciate your help. I am trying to understand every, little, tiny last detail and point of failure. This is what I have always done. This post and answers will help others as time goes on. The amount of crap out there regarding Sub2, as well as the attitudes of other people towards it and those that employ the technique, is genuinely staggering.
  Your questions have reached the point of being where you’re not (in my opinion) going to be able to receive answers you have confidence in on BP forum - you’re going to have to engage the services of legal counsel specializing in Michigan real estate law. It would probably be well worth it for your peace of mind to do so, and something unexpected may turn up that suggests a simple solution that satisfies your concerns.
  
  Beyond that - 2 other things
  
  First, all real estate investment has risk - but after a certain point the risk is too small to justify the worry or expense of taking a “counter” action. Only experience will teach you when that point is reached in any given deal.
  
  Second, there’s absolutely nothing to be gained by “attacking” a responding poster. Even if (in your opinion) the responder made an incorrect assumption, or comes off sounding harsh, a much better approach is to just state the facts - and why they may be incorrect. Personal attacks and counter attacks often escalate to the point where any benefit (other than “entertainment” is totally lost.
  
  I'm not sure there's much to be gained from the BP Forum here in either case as so many of the people who responded either used AI, barely knew what they were talking about, projected some wierdo emotional concern troll nonsense, hardly seemed to be able to type coherent sentences at all even if the above weren't of concern. Anyway, what made you think for a second I was interested in your feedback on online conduct?
  
  Ian your an @@$ hole full stop you can leave BP anytime.. your the poster child for someone asking advice but you already know it all so why bother. I started doing wraps and sub to in the late 70s and have done hundreds of them.. what have you done ? Nothing one big deal so what.
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  1 Reply
- Don KonipolBusiness Member
  Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
  9mo
  Quote from @Jay Hinrichs:
  
  Quote from @Iain A.:
  
  Quote from @Don Konipol:
  
  Quote from @Iain A.:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Iain A.:
  
  Quote from @Drew Sygit:
  
  POA - should have been limited to anything related to the mortgage, only ending when mortgage paid off.
  - will the seller sign a new one?
  - I you have POA, you dn't need seller cooperation.
  LLC - should have put it in a single-member LLC to avoid due-on-sale scrutiny.
  Insurance - should have stayed in seller's name with LLC and you added as "Additionally Insured" to avoid due-on-sale scrutiny.
  You've increased your due-on-sale risk as per my points above. Roll of the dice if the loan is called ue, but the transaction technically has violated the mortgage due-on-sale clause.
  Yes, Michigan law requires surplus to go to owner.
  
  Interesting, the few instances of due on sale clause being executed that I could find involved transferring to single member LLC's. As you see it, what benefit is there to the bank of having an informal assumption under and LLC vs an individual?
  
  None of the insurance companies I spoke with would allow such a configuration for insurance. Besides, how is that any less likely to invite scrutiny when there's still an additional person on there? Moreover, as long as the mortgagee and the loan number match as insured parties how would three entities over two be preferred by the lender in the event of a claim? Never mind that the former owner now has no claim to title.
  
  Your points are not valid. Are you a bot?
  
  what are you worried about.. if the loan is called refi or pay it off simple as that.. that is the downside risk of sub to and what any sub to buyer needs to understand and be ready to do in the fairly rare event that a loan gets called.. I had it happen twice we just stroke the check and pay it off thats after about 200 sub to's i did personally.
  
  Drew is a real person I dont think he is a bot / robot.
  
  As for what I am worried about - mostly highly granular and unlikely scenarios which is why I came here. I also don't want to pay PITI when I could just pay P and I while taxes build up in an escrow account with his name on it lol. This is therefore to say many little details.
  You are correct, I could and will just pay it off if it comes down to it though this requires proper notice. This is why I was asking about sherriff sales, foreclosure, yadda yadda. I can obviate issues with proper notice with a thorough understanding of the process.
  So, I am a traveler. Therefore, I use a virtual mailbox service. My virtual mailbox service will not accept mail from someone else without their consent. The seller is extremely busy and I haven't had time to run the USPS form passed him and am not sure he should or would trust me with the level of authorization required to receive his statements as USPS Policy requiers access to recive all mail in their name, just not single pieces. If it were me, I wouldn't be cool with that.
  I could use someone else in town though this poses potential risks. So, this is one failure point: receiving notice should my access to his online mortgage account be compromised.
  If the seller gets incapacitated or something like that happens and I lose access to his account where I am making payments then I'd also be unable to receive notice of any action from the bank if my tenants didn't tell me there were notices coming.
  This is my first deal and I do not want to mess up the sellers credit, have to deal with any foreclosure proceedings, have my tenants have to move randomly, ect. I have found it exceedingly difficult to find people who even know what Sub2 is, so, I appreciate you coming on and saying as much. I figured coming here to figure all this out would be a good place to start.
  As for paid training, most guru's are crap. I checked out Pace Morby but couldn't find a link to pay him or his team for a half hour consult. I also don't have the time to vet him and make sure he's as point as every other guru claims they are.
  
  I appreciate your help. I am trying to understand every, little, tiny last detail and point of failure. This is what I have always done. This post and answers will help others as time goes on. The amount of crap out there regarding Sub2, as well as the attitudes of other people towards it and those that employ the technique, is genuinely staggering.
  Your questions have reached the point of being where you’re not (in my opinion) going to be able to receive answers you have confidence in on BP forum - you’re going to have to engage the services of legal counsel specializing in Michigan real estate law. It would probably be well worth it for your peace of mind to do so, and something unexpected may turn up that suggests a simple solution that satisfies your concerns.
  
  Beyond that - 2 other things
  
  First, all real estate investment has risk - but after a certain point the risk is too small to justify the worry or expense of taking a “counter” action. Only experience will teach you when that point is reached in any given deal.
  
  Second, there’s absolutely nothing to be gained by “attacking” a responding poster. Even if (in your opinion) the responder made an incorrect assumption, or comes off sounding harsh, a much better approach is to just state the facts - and why they may be incorrect. Personal attacks and counter attacks often escalate to the point where any benefit (other than “entertainment” is totally lost.
  
  I'm not sure there's much to be gained from the BP Forum here in either case as so many of the people who responded either used AI, barely knew what they were talking about, projected some wierdo emotional concern troll nonsense, hardly seemed to be able to type coherent sentences at all even if the above weren't of concern. Anyway, what made you think for a second I was interested in your feedback on online conduct?
  
  Ian your an @@$ hole full stop you can leave BP anytime.. your the poster child for someone asking advice but you already know it all so why bother. I started doing wraps and sub to in the late 70s and have done hundreds of them.. what have you done ? Nothing one big deal so what.
  I would be interested to know what the clinical psychological diagnosis for these posters whose response to any answer they dislike is to attempt to belittle, degrade, ridicule, name call and attack. They’re obviously not here to get answers to their “questions”.
  What’s also interesting is that they exhibit little knowledge or experience in real estate or in business in general. However they seem to cling to their initial position with a “certainty” that belies an inability to consider any information, no matter how obvious its truth, that in even the slightest way contradicts their preconceived notions.
  They also ALWAYS end their argument by telling you how successful they are, despite their revealing initial posts which indicate the very opposite. Reminds me of the investor I know years ago that was often foreclosed upon, and attended the foreclosure sales of his properties to bid himself?, but of course couldn’t provide any proof of funds so his bids were removed.
  In Texas we have an expression for these blowhards, BIG HAT, NO CATTLE.
  Private Mortgage Financing Partners, LLC
  Website View Page
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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
10mo
Quote from @Iain A.:
Closed on a Sub2 in Michigan last week. I'm now on title, seller is still the borrower. My plan is to just keep the property for good. I've done plenty of deals as a former agent, but this is my first Sub2 on my own property, and a few things that popped up after closing pushed me into a deep-dive on worst-case scenarios. Now I want sanity checks from people who actually operate Sub2s in the real world—not guru scripts.

I have enough to pay off loan now and have current pay offs ready to go for the next couple weeks, so, now that I’m on title and this isn’t some flim flam guru crap I’m considering just paying it all off. Although, I am not sure that’s wise unless or if I am forced to do so considering how long my capital would be locked up for.

Power of Attorney:
The POA my title attorney drafted is basically worthless; it terminates when the deed transfers, so it doesn't survive closing. That made me look harder at whether a POA even matters. From what I've found, once the deed is recorded I count as a successor-in-interest. Wells Fargo has to give me access to payoff and reinstatement amounts, and I can reinstate or pay off without needing the seller. For those who've actually done Sub2 in Michigan: do you even bother with POAs, or is that more of a guru artifact?

Seller cooperation:
I initially assumed I'd need the Seller for anything involving the loan. From what I'm seeing, that's wrong. As the titled owner, I can reinstate, pay off, or even redeem the property if it ever went to sheriff's sale. Michigan law allows anyone "claiming under the mortgagor" to redeem, which seems to cover me. Has anyone here actually reinstated or paid off without the seller involved? As of now our plan is for me to log into his account and pay the PITI myself.

Insurance and Escrow:

I went ahead and got insurance in my name with the mortgagor as Wells Fargo with the correct loan number, so, it is insured. The insurer sent Wells a copy. Wells did just call the mortgagee yesterday, he couldn’t answer so we are not sure what about, my guess would be the change in insurance. I’d like to have him cancel his escrow, get his money back and that way I can just pay principal and interest to Wells Fargo and worry about taxes and insurance on my own.

Due-on-sale risk:
This one feels mostly theoretical. It's a straight person-to-person Sub2—no LLC, no delinquency, insurance handled correctly, not messing with escrow. Anyone here ever had Wells Fargo actually call a DOS on a clean deal like that? I'd like to cancel the escrow, get the seller his few grand in there, and just pay Princiapl and Interest to Wells Fargo.

Foreclosure & protecting equity:

I always assumed that if a Sub2 goes sideways and the lender forecloses, I lose all my equity. Multiple attorneys told me that's not how Michigan works. If the property sells at sheriff's sale above what's owed, the surplus goes to the titled owner. And even if it sells low, I still have the 6-month redemption window. So if WF forecloses and bidding hits, say, $90k on a $62k payoff—do I realistically walk with the surplus? Anyone lived this process?

Where I’m actually at:
I’m not nervous about real estate generally; I just hate relying on a seller for anything. When I map it out, a lot has to go wrong for me to actually lose money: WF calls the loan, I can’t refinance or pay it off, seller doesn’t cooperate, foreclosure goes the full distance, the sale price is low, and I don’t redeem. That’s a long string of failures, but I want to make sure my understanding is accurate.

My questions for the BP veterans:

Does a POA really matter on a Michigan Sub2?

Has anyone reinstated or paid off without the seller?

Any actual DOS calls from Wells Fargo on a clean Sub2?

In Michigan, does the titled owner really get the surplus after the sheriff's sale?

Is there any realistic way to lose all equity if payments stay current?

Would appreciate input from people who've actually run multiple Sub2 deals—especially in Michigan or with Wells Fargo. I'm trying to cut through the noise and get the real story.

I also appreciate just how much of a fad thing this is. It has been such a challenge to find attorneys, title companies and the like who have any idea what a subject to deal is. Thanks!
You’ve just got a bad case of nerves. WORST case scenario is Wells Fargo forecloses, you pay off loan. Foreclosure laws in Michigan (as everywhere) require notification of all parties with a recorded interest.

Years ago with a subject to I sold (actually a wrap) the lender called the loan because the interest rate was 7% while current rates were 12%. I negotiated on behalf of the buyer (and myself) for the buyer to ASSUME the loan (taking me off ) with an increased interest rate to 9.25%. My wrap amount differential became a second lien. By coincidence the property was located in Ann Arbor.
Private Mortgage Financing Partners, LLC
Website View Page
3 Reply
- Iain A.
  OP
  New to Real Estate · Port Huron, MI · Member since 2017 · 26 posts · 5 votes
  10mo
  Quote from @Don Konipol:
  
  Quote from @Iain A.:
  
  Closed on a Sub2 in Michigan last week. I'm now on title, seller is still the borrower. My plan is to just keep the property for good. I've done plenty of deals as a former agent, but this is my first Sub2 on my own property, and a few things that popped up after closing pushed me into a deep-dive on worst-case scenarios. Now I want sanity checks from people who actually operate Sub2s in the real world—not guru scripts.
  
  I have enough to pay off loan now and have current pay offs ready to go for the next couple weeks, so, now that I’m on title and this isn’t some flim flam guru crap I’m considering just paying it all off. Although, I am not sure that’s wise unless or if I am forced to do so considering how long my capital would be locked up for.
  
  Power of Attorney:
  The POA my title attorney drafted is basically worthless; it terminates when the deed transfers, so it doesn't survive closing. That made me look harder at whether a POA even matters. From what I've found, once the deed is recorded I count as a successor-in-interest. Wells Fargo has to give me access to payoff and reinstatement amounts, and I can reinstate or pay off without needing the seller. For those who've actually done Sub2 in Michigan: do you even bother with POAs, or is that more of a guru artifact?
  
  Seller cooperation:
  I initially assumed I'd need the Seller for anything involving the loan. From what I'm seeing, that's wrong. As the titled owner, I can reinstate, pay off, or even redeem the property if it ever went to sheriff's sale. Michigan law allows anyone "claiming under the mortgagor" to redeem, which seems to cover me. Has anyone here actually reinstated or paid off without the seller involved? As of now our plan is for me to log into his account and pay the PITI myself.
  
  Insurance and Escrow:
  
  I went ahead and got insurance in my name with the mortgagor as Wells Fargo with the correct loan number, so, it is insured. The insurer sent Wells a copy. Wells did just call the mortgagee yesterday, he couldn’t answer so we are not sure what about, my guess would be the change in insurance. I’d like to have him cancel his escrow, get his money back and that way I can just pay principal and interest to Wells Fargo and worry about taxes and insurance on my own.
  
  Due-on-sale risk:
  This one feels mostly theoretical. It's a straight person-to-person Sub2—no LLC, no delinquency, insurance handled correctly, not messing with escrow. Anyone here ever had Wells Fargo actually call a DOS on a clean deal like that? I'd like to cancel the escrow, get the seller his few grand in there, and just pay Princiapl and Interest to Wells Fargo.
  
  Foreclosure & protecting equity:
  
  I always assumed that if a Sub2 goes sideways and the lender forecloses, I lose all my equity. Multiple attorneys told me that's not how Michigan works. If the property sells at sheriff's sale above what's owed, the surplus goes to the titled owner. And even if it sells low, I still have the 6-month redemption window. So if WF forecloses and bidding hits, say, $90k on a $62k payoff—do I realistically walk with the surplus? Anyone lived this process?
  
  Where I’m actually at:
  I’m not nervous about real estate generally; I just hate relying on a seller for anything. When I map it out, a lot has to go wrong for me to actually lose money: WF calls the loan, I can’t refinance or pay it off, seller doesn’t cooperate, foreclosure goes the full distance, the sale price is low, and I don’t redeem. That’s a long string of failures, but I want to make sure my understanding is accurate.
  
  My questions for the BP veterans:
  
  Does a POA really matter on a Michigan Sub2?
  
  Has anyone reinstated or paid off without the seller?
  
  Any actual DOS calls from Wells Fargo on a clean Sub2?
  
  In Michigan, does the titled owner really get the surplus after the sheriff's sale?
  
  Is there any realistic way to lose all equity if payments stay current?
  
  Would appreciate input from people who've actually run multiple Sub2 deals—especially in Michigan or with Wells Fargo. I'm trying to cut through the noise and get the real story.
  
  I also appreciate just how much of a fad thing this is. It has been such a challenge to find attorneys, title companies and the like who have any idea what a subject to deal is. Thanks!
  
  You’ve just got a bad case of nerves. WORST case scenario is Wells Fargo forecloses, you pay off loan. Foreclosure laws in Michigan (as everywhere) require notification of all parties with a recorded interest.
  
  Years ago with a subject to I sold (actually a wrap) the lender called the loan because the interest rate was 7% while current rates were 12%. I negotiated on behalf of the buyer (and myself) for the buyer to ASSUME the loan (taking me off ) with an increased interest rate to 9.25%. My wrap amount differential became a second lien. By coincidence the property was located in Ann Arbor.
  
  Yeah, I am beginning to see that as the dust settles haha, thanks for recognizing that it's mostly nerves. So, in your case, did you have Power of Attorney from your seller with respect to the mortgage you took over? I ask because I assumed that the lender would not talk to anyone but the mortgagee without Power of Attorney.
  How much time after you closed did they call the loan due? In my case the existing mortgage is at 3.25%. Rates are, what 7%ish? Not sure if that's enough spread to warrant due on sale action. It's only like $60k too.
  Also, did you cancel escrow? Seller has a few thousand sitting in there, I'd like to surprise him with that since it goes back to him. He told me he didn't care about what happens to it when we were negotiating. I am pretty sure he didn't know how much it was lol.
  But yeah, I am paying homeowners insurance now, they're set up to take taxes out of escrow as well but the seller is going to cancel his policy which would mean that the bank would keep adding to escrow without changing the montly PITI payment thus resulting in an endless build of cash I can't use lol. Not sure, never had a mortgage or owned a home. Thanks man!
  0 Reply
- Jennie Ballard
  Member since 2025 · 40 posts · 13 votes
  10mo
  You can contact the lender and request a review of escrow account to get the PITI payment updated. I had to do that after Texas changed a bunch of homestead exemptions lowering my property taxes. I sent them the info on the new tax rate and they did a "Short Year Analysis". They ended up mailing me a check for overage and dropped PITI about $100 per month.
  0 Reply
- Iain A.
  OP
  New to Real Estate · Port Huron, MI · Member since 2017 · 26 posts · 5 votes
  10mo
  Quote from @Jennie Ballard:
  
  You can contact the lender and request a review of escrow account to get the PITI payment updated. I had to do that after Texas changed a bunch of homestead exemptions lowering my property taxes. I sent them the info on the new tax rate and they did a "Short Year Analysis". They ended up mailing me a check for overage and dropped PITI about $100 per month.
  
  Okay cool, were you the person that took out the loan initially or someone who informally "assumed" the loan in a Subject To fashion. If the latter is the case how were you able to communicate with the lender? I ask because I know the person on the loan now who I bought the house from is capable of asking for that - that much is obvious.
  0 Reply
- Jennie Ballard
  Member since 2025 · 40 posts · 13 votes
  10mo
  I sent the request thru mortgage company website. I was not on mortgage etc since husband purchased before marriage. That said no one checks who has access to "secure" website portals. I impersonate him on the web and phone with permission all the time dealing with health insurance and mortgage. Only time identity is verified is for notarized documents.
  0 Reply
Stuart UdisPro Member
Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
10mo
A bit concerning that you’re already asking about sheriff sale redemptions and surplus proceeds just a week after completing a Subject-to transaction. If that’s even on your radar this early, you really have no business leveraging someone else’s credit.
[email protected]
1 Reply
- Iain A.
  OP
  New to Real Estate · Port Huron, MI · Member since 2017 · 26 posts · 5 votes
  10mo
  Quote from @Stuart Udis:
  
  A bit concerning that you’re already asking about sheriff sale redemptions and surplus proceeds just a week after completing a Subject-to transaction. If that’s even on your radar this early, you really have no business leveraging someone else’s credit.
  
  You might want to brush up on your reading comprehension. The entire post was about dialing in the mechanics on a first Sub2 so the seller’s credit stays protected and my equity stays insulated—not because I’m expecting a foreclosure next week.
  
  Some of us prefer to understand the downside instead of winging it and pretending that’s professionalism. And your response is exactly what I’d expect from a lawyer: plenty of arrogance, not much accuracy.
  
  0 Reply
- Stuart UdisPro Member
  Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
  10mo
  Quote from @Iain A.:
  
  Quote from @Stuart Udis:
  
  A bit concerning that you’re already asking about sheriff sale redemptions and surplus proceeds just a week after completing a Subject-to transaction. If that’s even on your radar this early, you really have no business leveraging someone else’s credit.
  
  You might want to brush up on your reading comprehension. The entire post was about dialing in the mechanics on a first Sub2 so the seller’s credit stays protected and my equity stays insulated—not because I’m expecting a foreclosure next week.
  
  Some of us prefer to understand the downside instead of winging it and pretending that’s professionalism. And your response is exactly what I’d expect from a lawyer: plenty of arrogance, not much accuracy.
  
  @Iain A. I know exactly what I read. You were asking about the repercussions of a foreclosure, redemption timelines, and surplus proceeds as if any of that would ever be relevant to a responsible person who completed a sub2 transaction. Then you claim you want to “protect the seller’s credit,” while simultaneously describing scenarios that only occur after months of missed payments and severe derogatory reporting.
  
  Once you’re talking about sheriff sales, the seller’s credit has already been destroyed. A competent operator never lets it get within miles of that point—they either pay off the loan or refinance. The fact that you’re treating foreclosure mechanics as part of your planning process says everything about your readiness to handle someone else’s mortgage. In case you need a refresher of what you wrote:
  
  Foreclosure & protecting equity:
  
  I always assumed that if a Sub2 goes sideways and the lender forecloses, I lose all my equity. Multiple attorneys told me that's not how Michigan works. If the property sells at sheriff's sale above what's owed, the surplus goes to the titled owner. And even if it sells low, I still have the 6-month redemption window. So if WF forecloses and bidding hits, say, $90k on a $62k payoff—do I realistically walk with the surplus? Anyone lived this process?
  [email protected]
  0 Reply
- Iain A.
  OP
  New to Real Estate · Port Huron, MI · Member since 2017 · 26 posts · 5 votes
  10mo
  You’re still proving you didn’t actually read what I wrote or at the very least have some weird interpretation of it that shows more about you and your mindset than me or my deal.
  Knowing the foreclosure and redemption mechanics isn’t me expecting this deal to implode — it’s me understanding every last piece of the structure I just bought. Responsible operators know the downside dead to rights. You are projecting your own lack of confidence and silliness onto me because I’m actually being thorough is hilarious.
  
  And yes, it ties directly into protecting the seller’s credit. If something happens and I need to step in, I’m not going to be learning this stuff while the clock is running. It’s a $650/mo payment, like, who could not be "ready" for that? Never mind that you jumped to conclusions about me and my care for others without asking under what circumstances, all of them necessarily seller initiated or inspired, for lack of a better term, would lead to these proceedings in the first place. Knock it off bro, aren't you supposed to me smart and/or educated?
  What if the seller is incapacitated? What if notices don’t reach me because of highly granular details about my situation? What if mail forwarding becomes an issue? These are practical realities, not signs of incompetence. If you weren't coming from some sort of weird troll angle, you'd be looking at this as someone who is hell bent for leather on keeping everything copacetic. Never mind missing the point where I indicate that I have enough to pay the whole thing off anyway, so, like, yeah, thanks for not copy and pasting ChatGPT responses at least!
  
  Honestly, posting here has been really disappointing. We've got people just flat out copy and pasting ChatGPT responses, this attorney, supposedly, saying the same dumb stuff almost all the lawyers I talked to over the phone said anyway.
  0 Reply
- Jason Eyerly
  Real Estate Agent · Charleston, SC · Member since 2013 · 424 posts · 99 votes
  9mo
  Quote from @Stuart Udis:
  
  A bit concerning that you’re already asking about sheriff sale redemptions and surplus proceeds just a week after completing a Subject-to transaction. If that’s even on your radar this early, you really have no business leveraging someone else’s credit.
  Odd for someone with an email based on asset protection to chastise someone asking about asset protection. Boring day on the internet?
  1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10mo
Ken M usually answers these he is a sub to trainer I am sure he can help you.

along with Morby he has all sorts of training on the subject.
Although both of these have pay to play training..
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
0 Reply
James JonesPro Member
Investor · Collierville, TN 38017 · Member since 2017 · 778 posts · 571 votes
10mo
Hey Iain, congrats on getting your first Sub2 across the finish line. A lot of people talk about Sub2 but very few actually operate them in the real world, so you're asking the right questions. I'll share how we handle these based on actual deals, not theory.

1. POA – does it matter in Michigan?

A POA is helpful, but you're correct that most POAs drafted during closing terminate when title transfers.

In Michigan, once you’re on title, you are treated as a successor in interest under federal servicing rules. That gives you the right to:

Reinstate

Request reinstatement quotes

Request payoff

Communicate directly with the servicer

So a POA is nice to have, but not a critical failure point in Michigan. Many investors don't use them at all.

2. Reinstating or paying off without the seller

Yes — this is absolutely doable in Michigan.

Michigan law allows “any party claiming under the mortgagor” to reinstate or redeem. Being on title puts you in that category.

We’ve reinstated without seller involvement before. It’s clean and straightforward once the servicer recognizes you as successor-in-interest.

3. Due-on-sale risk

I'll give it to you straight: Wells Fargo can call a DOS anytime they detect a transfer, but in practice:

Clean deal

Payments current

Insurance handled correctly

No escrow meddling, is extremely low-risk.

Can they? Yes.

Do they? On clean Sub2s with no red flags? Practically never.

Most DOS calls come from:

Investors screwing with escrow

Letting insurance lapse

Changing mailing address improperly

Arguing with the lender

Falling behind on payments

You’re doing the opposite.

4. Escrow, insurance, and whether to cancel

Your understanding is correct: WF is likely calling about the insurance change.

You can:

Keep escrow as-is (simplest and least risky)

Or cancel escrow and pay P&I only

Just be aware that messing with escrow is one of the biggest practical triggers for lender scrutiny. If the seller can’t (or won’t) cancel it cleanly, I wouldn’t force it.

5. Foreclosure + surplus equity

Michigan is actually one of the more investor-friendly states in this scenario.

If WF forecloses:

Property sells at sheriff’s sale

Any surplus after payoff goes to the titled owner, meaning YOU

And you still have a 6-month redemption period to buy it back

So yes, if bidding goes high because of market comps, you can realistically walk away with the surplus.

You only lose equity if:

Payment stops

Lender forecloses

Auction price is below payoff

You choose not to redeem

That’s multiple failure points. Staying current avoids almost all of this.

6. Should you just pay it off now?

Financially, Sub2 only makes sense if you're leveraging the existing loan terms.

Paying it off immediately defeats the purpose unless:

The rate is terrible

Title obstacles exist

Equity is so high that it turns into a clean cash deal

If your capital is limited, pause before locking it up for years.

My quick answers to your list:

Does a POA matter?

Helpful, not mandatory in MI.

Reinstate/payoff without seller?

Yes, fully doable.

Any real DOS calls on clean deals?

Rare to nonexistent unless something else triggers it.

Does titled owner really get sheriff-sale surplus?

Yes, Michigan statute is clear. Surplus goes to the owner of record.

Any realistic way to lose all equity if payments stay current?

Not really. Staying current avoids 95 percent of risk.
1 Reply
- Iain A.
  OP
  New to Real Estate · Port Huron, MI · Member since 2017 · 26 posts · 5 votes
  10mo
  Quote from @James Jones:
  
  Hey Iain, congrats on getting your first Sub2 across the finish line. A lot of people talk about Sub2 but very few actually operate them in the real world, so you're asking the right questions. I'll share how we handle these based on actual deals, not theory.
  
  1. POA – does it matter in Michigan?
  
  A POA is helpful, but you're correct that most POAs drafted during closing terminate when title transfers.
  
  In Michigan, once you’re on title, you are treated as a successor in interest under federal servicing rules. That gives you the right to:
  
  Reinstate
  
  Request reinstatement quotes
  
  Request payoff
  
  Communicate directly with the servicer
  
  So a POA is nice to have, but not a critical failure point in Michigan. Many investors don't use them at all.
  
  2. Reinstating or paying off without the seller
  
  Yes — this is absolutely doable in Michigan.
  
  Michigan law allows “any party claiming under the mortgagor” to reinstate or redeem. Being on title puts you in that category.
  
  We’ve reinstated without seller involvement before. It’s clean and straightforward once the servicer recognizes you as successor-in-interest.
  
  3. Due-on-sale risk
  
  I'll give it to you straight: Wells Fargo can call a DOS anytime they detect a transfer, but in practice:
  
  Clean deal
  
  Payments current
  
  Insurance handled correctly
  
  No escrow meddling, is extremely low-risk.
  
  Can they? Yes.
  
  Do they? On clean Sub2s with no red flags? Practically never.
  
  Most DOS calls come from:
  
  Investors screwing with escrow
  
  Letting insurance lapse
  
  Changing mailing address improperly
  
  Arguing with the lender
  
  Falling behind on payments
  
  You’re doing the opposite.
  
  4. Escrow, insurance, and whether to cancel
  
  Your understanding is correct: WF is likely calling about the insurance change.
  
  You can:
  
  Keep escrow as-is (simplest and least risky)
  
  Or cancel escrow and pay P&I only
  
  Just be aware that messing with escrow is one of the biggest practical triggers for lender scrutiny. If the seller can’t (or won’t) cancel it cleanly, I wouldn’t force it.
  
  5. Foreclosure + surplus equity
  
  Michigan is actually one of the more investor-friendly states in this scenario.
  
  If WF forecloses:
  
  Property sells at sheriff’s sale
  
  Any surplus after payoff goes to the titled owner, meaning YOU
  
  And you still have a 6-month redemption period to buy it back
  
  So yes, if bidding goes high because of market comps, you can realistically walk away with the surplus.
  
  You only lose equity if:
  
  Payment stops
  
  Lender forecloses
  
  Auction price is below payoff
  
  You choose not to redeem
  
  That’s multiple failure points. Staying current avoids almost all of this.
  
  6. Should you just pay it off now?
  
  Financially, Sub2 only makes sense if you're leveraging the existing loan terms.
  
  Paying it off immediately defeats the purpose unless:
  
  The rate is terrible
  
  Title obstacles exist
  
  Equity is so high that it turns into a clean cash deal
  
  If your capital is limited, pause before locking it up for years.
  
  My quick answers to your list:
  
  Does a POA matter?
  
  Helpful, not mandatory in MI.
  
  Reinstate/payoff without seller?
  
  Yes, fully doable.
  
  Any real DOS calls on clean deals?
  
  Rare to nonexistent unless something else triggers it.
  
  Does titled owner really get sheriff-sale surplus?
  
  Yes, Michigan statute is clear. Surplus goes to the owner of record.
  
  Any realistic way to lose all equity if payments stay current?
  
  Not really. Staying current avoids 95 percent of risk.
  
  Glad to see I'm not the only one using ChatGPT haha. Is there some benefit on here to just copy and pasting stuff from it that I'm not aware of just to generate like post points?
  
  My issue with ChatGPT has been that, throughout this entire deal it missed critical points. I thought this was an excellent use case to test it out and it screwed up the following:
  1. Failing to notice a ridiculously low occupancy rate. It failed to point out that $25 a day barely covered the existing PITI.
  
  2. Failed to recognize that the language in my particular POA was dead on arrival.
  3. Getting PITI Numbers wrong.
  4. Misunderstanding practical reality of escrow management.
  5. General and extreme over confidence.
  Please keep low effort copy and paste crap away from questions that I and others are attempting to use in the future in real world situations. People like you are the reason why we need fact checkers and the internet largely sucks now.
  While you're at it, kindly explain the benefit to you of just gaining points this way on BP. Anyone who has an IQ above 85 is going to read the slop you copy and paste and realize you're a plagiaristic dope.
  1 Reply
- Steve K.
  Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
  10mo
  Quote from @Iain A.:
  
  Quote from @James Jones:
  
  Hey Iain, congrats on getting your first Sub2 across the finish line. A lot of people talk about Sub2 but very few actually operate them in the real world, so you're asking the right questions. I'll share how we handle these based on actual deals, not theory.
  
  1. POA – does it matter in Michigan?
  
  A POA is helpful, but you're correct that most POAs drafted during closing terminate when title transfers.
  
  In Michigan, once you’re on title, you are treated as a successor in interest under federal servicing rules. That gives you the right to:
  
  Reinstate
  
  Request reinstatement quotes
  
  Request payoff
  
  Communicate directly with the servicer
  
  So a POA is nice to have, but not a critical failure point in Michigan. Many investors don't use them at all.
  
  2. Reinstating or paying off without the seller
  
  Yes — this is absolutely doable in Michigan.
  
  Michigan law allows “any party claiming under the mortgagor” to reinstate or redeem. Being on title puts you in that category.
  
  We’ve reinstated without seller involvement before. It’s clean and straightforward once the servicer recognizes you as successor-in-interest.
  
  3. Due-on-sale risk
  
  I'll give it to you straight: Wells Fargo can call a DOS anytime they detect a transfer, but in practice:
  
  Clean deal
  
  Payments current
  
  Insurance handled correctly
  
  No escrow meddling, is extremely low-risk.
  
  Can they? Yes.
  
  Do they? On clean Sub2s with no red flags? Practically never.
  
  Most DOS calls come from:
  
  Investors screwing with escrow
  
  Letting insurance lapse
  
  Changing mailing address improperly
  
  Arguing with the lender
  
  Falling behind on payments
  
  You’re doing the opposite.
  
  4. Escrow, insurance, and whether to cancel
  
  Your understanding is correct: WF is likely calling about the insurance change.
  
  You can:
  
  Keep escrow as-is (simplest and least risky)
  
  Or cancel escrow and pay P&I only
  
  Just be aware that messing with escrow is one of the biggest practical triggers for lender scrutiny. If the seller can’t (or won’t) cancel it cleanly, I wouldn’t force it.
  
  5. Foreclosure + surplus equity
  
  Michigan is actually one of the more investor-friendly states in this scenario.
  
  If WF forecloses:
  
  Property sells at sheriff’s sale
  
  Any surplus after payoff goes to the titled owner, meaning YOU
  
  And you still have a 6-month redemption period to buy it back
  
  So yes, if bidding goes high because of market comps, you can realistically walk away with the surplus.
  
  You only lose equity if:
  
  Payment stops
  
  Lender forecloses
  
  Auction price is below payoff
  
  You choose not to redeem
  
  That’s multiple failure points. Staying current avoids almost all of this.
  
  6. Should you just pay it off now?
  
  Financially, Sub2 only makes sense if you're leveraging the existing loan terms.
  
  Paying it off immediately defeats the purpose unless:
  
  The rate is terrible
  
  Title obstacles exist
  
  Equity is so high that it turns into a clean cash deal
  
  If your capital is limited, pause before locking it up for years.
  
  My quick answers to your list:
  
  Does a POA matter?
  
  Helpful, not mandatory in MI.
  
  Reinstate/payoff without seller?
  
  Yes, fully doable.
  
  Any real DOS calls on clean deals?
  
  Rare to nonexistent unless something else triggers it.
  
  Does titled owner really get sheriff-sale surplus?
  
  Yes, Michigan statute is clear. Surplus goes to the owner of record.
  
  Any realistic way to lose all equity if payments stay current?
  
  Not really. Staying current avoids 95 percent of risk.
  
  Glad to see I'm not the only one using ChatGPT haha. Is there some benefit on here to just copy and pasting stuff from it that I'm not aware of just to generate like post points?
  
  My issue with ChatGPT has been that, throughout this entire deal it missed critical points. I thought this was an excellent use case to test it out and it screwed up the following:
  1. Failing to notice a ridiculously low occupancy rate. It failed to point out that $25 a day barely covered the existing PITI.
  
  2. Failed to recognize that the language in my particular POA was dead on arrival.
  3. Getting PITI Numbers wrong.
  4. Misunderstanding practical reality of escrow management.
  5. General and extreme over confidence.
  Please keep low effort copy and paste crap away from questions that I and others are attempting to use in the future in real world situations. People like you are the reason why we need fact checkers and the internet largely sucks now.
  While you're at it, kindly explain the benefit to you of just gaining points this way on BP. Anyone who has an IQ above 85 is going to read the slop you copy and paste and realize you're a plagiaristic dope.
  
  You’re kinda brash but I like it. “People like you are the reason we need fact checkers and the internet largely sucks now”. This is GOLD. Just dropping by to appreciate the AI response callout.
  Pay somebody like @Ken M (can't tag him so it's possible he has been banned from BP again…) if you want to learn all about Sub2. He'll probably tell you that how you did it is all wrong. Why use that deal structure if you're risk-averse? It seems after scouting the internet, kneeling to the ChatGPT gods, taking to lawyers, replies here haven't alleviated your concerns, just buy the property without the sub2 shenanigans and be done with it?
  0 Reply
- Iain A.
  OP
  New to Real Estate · Port Huron, MI · Member since 2017 · 26 posts · 5 votes
  9mo
  Quote from @Steve K.:
  
  Quote from @Iain A.:
  
  Quote from @James Jones:
  
  Hey Iain, congrats on getting your first Sub2 across the finish line. A lot of people talk about Sub2 but very few actually operate them in the real world, so you're asking the right questions. I'll share how we handle these based on actual deals, not theory.
  
  1. POA – does it matter in Michigan?
  
  A POA is helpful, but you're correct that most POAs drafted during closing terminate when title transfers.
  
  In Michigan, once you’re on title, you are treated as a successor in interest under federal servicing rules. That gives you the right to:
  
  Reinstate
  
  Request reinstatement quotes
  
  Request payoff
  
  Communicate directly with the servicer
  
  So a POA is nice to have, but not a critical failure point in Michigan. Many investors don't use them at all.
  
  2. Reinstating or paying off without the seller
  
  Yes — this is absolutely doable in Michigan.
  
  Michigan law allows “any party claiming under the mortgagor” to reinstate or redeem. Being on title puts you in that category.
  
  We’ve reinstated without seller involvement before. It’s clean and straightforward once the servicer recognizes you as successor-in-interest.
  
  3. Due-on-sale risk
  
  I'll give it to you straight: Wells Fargo can call a DOS anytime they detect a transfer, but in practice:
  
  Clean deal
  
  Payments current
  
  Insurance handled correctly
  
  No escrow meddling, is extremely low-risk.
  
  Can they? Yes.
  
  Do they? On clean Sub2s with no red flags? Practically never.
  
  Most DOS calls come from:
  
  Investors screwing with escrow
  
  Letting insurance lapse
  
  Changing mailing address improperly
  
  Arguing with the lender
  
  Falling behind on payments
  
  You’re doing the opposite.
  
  4. Escrow, insurance, and whether to cancel
  
  Your understanding is correct: WF is likely calling about the insurance change.
  
  You can:
  
  Keep escrow as-is (simplest and least risky)
  
  Or cancel escrow and pay P&I only
  
  Just be aware that messing with escrow is one of the biggest practical triggers for lender scrutiny. If the seller can’t (or won’t) cancel it cleanly, I wouldn’t force it.
  
  5. Foreclosure + surplus equity
  
  Michigan is actually one of the more investor-friendly states in this scenario.
  
  If WF forecloses:
  
  Property sells at sheriff’s sale
  
  Any surplus after payoff goes to the titled owner, meaning YOU
  
  And you still have a 6-month redemption period to buy it back
  
  So yes, if bidding goes high because of market comps, you can realistically walk away with the surplus.
  
  You only lose equity if:
  
  Payment stops
  
  Lender forecloses
  
  Auction price is below payoff
  
  You choose not to redeem
  
  That’s multiple failure points. Staying current avoids almost all of this.
  
  6. Should you just pay it off now?
  
  Financially, Sub2 only makes sense if you're leveraging the existing loan terms.
  
  Paying it off immediately defeats the purpose unless:
  
  The rate is terrible
  
  Title obstacles exist
  
  Equity is so high that it turns into a clean cash deal
  
  If your capital is limited, pause before locking it up for years.
  
  My quick answers to your list:
  
  Does a POA matter?
  
  Helpful, not mandatory in MI.
  
  Reinstate/payoff without seller?
  
  Yes, fully doable.
  
  Any real DOS calls on clean deals?
  
  Rare to nonexistent unless something else triggers it.
  
  Does titled owner really get sheriff-sale surplus?
  
  Yes, Michigan statute is clear. Surplus goes to the owner of record.
  
  Any realistic way to lose all equity if payments stay current?
  
  Not really. Staying current avoids 95 percent of risk.
  
  Glad to see I'm not the only one using ChatGPT haha. Is there some benefit on here to just copy and pasting stuff from it that I'm not aware of just to generate like post points?
  
  My issue with ChatGPT has been that, throughout this entire deal it missed critical points. I thought this was an excellent use case to test it out and it screwed up the following:
  1. Failing to notice a ridiculously low occupancy rate. It failed to point out that $25 a day barely covered the existing PITI.
  
  2. Failed to recognize that the language in my particular POA was dead on arrival.
  3. Getting PITI Numbers wrong.
  4. Misunderstanding practical reality of escrow management.
  5. General and extreme over confidence.
  Please keep low effort copy and paste crap away from questions that I and others are attempting to use in the future in real world situations. People like you are the reason why we need fact checkers and the internet largely sucks now.
  While you're at it, kindly explain the benefit to you of just gaining points this way on BP. Anyone who has an IQ above 85 is going to read the slop you copy and paste and realize you're a plagiaristic dope.
  
  You’re kinda brash but I like it. “People like you are the reason we need fact checkers and the internet largely sucks now”. This is GOLD. Just dropping by to appreciate the AI response callout.
  Pay somebody like @Ken M (can't tag him so it's possible he has been banned from BP again…) if you want to learn all about Sub2. He'll probably tell you that how you did it is all wrong. Why use that deal structure if you're risk-averse? It seems after scouting the internet, kneeling to the ChatGPT gods, taking to lawyers, replies here haven't alleviated your concerns, just buy the property without the sub2 shenanigans and be done with it?
  
  Not much of a point in paying for it now, it's closed, rehab is underway. If they call it due I can cure or pay it off. Fortunately, I was able to find answered to all my issues far and away from the many dolts of BP.
  I don't think I'm brash, it's that everyone else is weak and pathetic, especially in RE. There is no shortage of arrogant, fake, two faced brown nosers. Very sad!
  0 Reply
- Steve K.
  Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
  9mo
  Quote from @Iain A.:
  
  Quote from @Steve K.:
  
  Quote from @Iain A.:
  
  Quote from @James Jones:
  
  Hey Iain, congrats on getting your first Sub2 across the finish line. A lot of people talk about Sub2 but very few actually operate them in the real world, so you're asking the right questions. I'll share how we handle these based on actual deals, not theory.
  
  1. POA – does it matter in Michigan?
  
  A POA is helpful, but you're correct that most POAs drafted during closing terminate when title transfers.
  
  In Michigan, once you’re on title, you are treated as a successor in interest under federal servicing rules. That gives you the right to:
  
  Reinstate
  
  Request reinstatement quotes
  
  Request payoff
  
  Communicate directly with the servicer
  
  So a POA is nice to have, but not a critical failure point in Michigan. Many investors don't use them at all.
  
  2. Reinstating or paying off without the seller
  
  Yes — this is absolutely doable in Michigan.
  
  Michigan law allows “any party claiming under the mortgagor” to reinstate or redeem. Being on title puts you in that category.
  
  We’ve reinstated without seller involvement before. It’s clean and straightforward once the servicer recognizes you as successor-in-interest.
  
  3. Due-on-sale risk
  
  I'll give it to you straight: Wells Fargo can call a DOS anytime they detect a transfer, but in practice:
  
  Clean deal
  
  Payments current
  
  Insurance handled correctly
  
  No escrow meddling, is extremely low-risk.
  
  Can they? Yes.
  
  Do they? On clean Sub2s with no red flags? Practically never.
  
  Most DOS calls come from:
  
  Investors screwing with escrow
  
  Letting insurance lapse
  
  Changing mailing address improperly
  
  Arguing with the lender
  
  Falling behind on payments
  
  You’re doing the opposite.
  
  4. Escrow, insurance, and whether to cancel
  
  Your understanding is correct: WF is likely calling about the insurance change.
  
  You can:
  
  Keep escrow as-is (simplest and least risky)
  
  Or cancel escrow and pay P&I only
  
  Just be aware that messing with escrow is one of the biggest practical triggers for lender scrutiny. If the seller can’t (or won’t) cancel it cleanly, I wouldn’t force it.
  
  5. Foreclosure + surplus equity
  
  Michigan is actually one of the more investor-friendly states in this scenario.
  
  If WF forecloses:
  
  Property sells at sheriff’s sale
  
  Any surplus after payoff goes to the titled owner, meaning YOU
  
  And you still have a 6-month redemption period to buy it back
  
  So yes, if bidding goes high because of market comps, you can realistically walk away with the surplus.
  
  You only lose equity if:
  
  Payment stops
  
  Lender forecloses
  
  Auction price is below payoff
  
  You choose not to redeem
  
  That’s multiple failure points. Staying current avoids almost all of this.
  
  6. Should you just pay it off now?
  
  Financially, Sub2 only makes sense if you're leveraging the existing loan terms.
  
  Paying it off immediately defeats the purpose unless:
  
  The rate is terrible
  
  Title obstacles exist
  
  Equity is so high that it turns into a clean cash deal
  
  If your capital is limited, pause before locking it up for years.
  
  My quick answers to your list:
  
  Does a POA matter?
  
  Helpful, not mandatory in MI.
  
  Reinstate/payoff without seller?
  
  Yes, fully doable.
  
  Any real DOS calls on clean deals?
  
  Rare to nonexistent unless something else triggers it.
  
  Does titled owner really get sheriff-sale surplus?
  
  Yes, Michigan statute is clear. Surplus goes to the owner of record.
  
  Any realistic way to lose all equity if payments stay current?
  
  Not really. Staying current avoids 95 percent of risk.
  
  Glad to see I'm not the only one using ChatGPT haha. Is there some benefit on here to just copy and pasting stuff from it that I'm not aware of just to generate like post points?
  
  My issue with ChatGPT has been that, throughout this entire deal it missed critical points. I thought this was an excellent use case to test it out and it screwed up the following:
  1. Failing to notice a ridiculously low occupancy rate. It failed to point out that $25 a day barely covered the existing PITI.
  
  2. Failed to recognize that the language in my particular POA was dead on arrival.
  3. Getting PITI Numbers wrong.
  4. Misunderstanding practical reality of escrow management.
  5. General and extreme over confidence.
  Please keep low effort copy and paste crap away from questions that I and others are attempting to use in the future in real world situations. People like you are the reason why we need fact checkers and the internet largely sucks now.
  While you're at it, kindly explain the benefit to you of just gaining points this way on BP. Anyone who has an IQ above 85 is going to read the slop you copy and paste and realize you're a plagiaristic dope.
  
  You’re kinda brash but I like it. “People like you are the reason we need fact checkers and the internet largely sucks now”. This is GOLD. Just dropping by to appreciate the AI response callout.
  Pay somebody like @Ken M (can't tag him so it's possible he has been banned from BP again…) if you want to learn all about Sub2. He'll probably tell you that how you did it is all wrong. Why use that deal structure if you're risk-averse? It seems after scouting the internet, kneeling to the ChatGPT gods, taking to lawyers, replies here haven't alleviated your concerns, just buy the property without the sub2 shenanigans and be done with it?
  
  Not much of a point in paying for it now, it's closed, rehab is underway. If they call it due I can cure or pay it off. Fortunately, I was able to find answered to all my issues far and away from the many dolts of BP.
  I don't think I'm brash, it's that everyone else is weak and pathetic, especially in RE. There is no shortage of arrogant, fake, two faced brown nosers. Very sad!
  Sometimes you just have to decide for yourself what your own risk tolerance level is. The internet is great for collecting a bunch of info that may or may not be accurate, and opinions that may or may not be valuable to you, but it can’t make decisions for you. Ultimately only you can pull your big boy pants up and make decisions for yourself based on the info that you have and your own risk tolerance, and if you can’t handle making decisions then high-risk strategies obviously aren’t for you. But everyone else is weak and pathetic, okay, that’s not projection at all I’m sure.
  1 Reply
Stuart UdisPro Member
Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
9mo
@Jason Eyerly Did you actually read @Iain A.'s posts? He’s asking about redemption procedures and hypothetical surplus proceeds, as if those questions matter after the fact. By the time any of that is relevant, the original owner who is still personally guaranteeing the mortgage already has their credit wrecked and a foreclosure on their record.
I see you have a recent run of posts suggesting your own interest in Subject 2 transactions. The fact you don't recognize the the consequences of a foreclosure on the subject 2 sellers credit shows your qualifications to comment on this subject.
[email protected]
2 Reply
- Don KonipolBusiness Member
  Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
  9mo
  Quote from @Stuart Udis:
  
  @Jason Eyerly Did you actually read @Iain A.'s posts? He’s asking about redemption procedures and hypothetical surplus proceeds, as if those questions matter after the fact. By the time any of that is relevant, the original owner who is still personally guaranteeing the mortgage already has their credit wrecked and a foreclosure on their record.
  I see you have a recent run of posts suggesting your own interest in Subject 2 transactions. The fact you don't recognize the the consequences of a foreclosure on the subject 2 sellers credit shows your qualifications to comment on this subject.
  Some asked me recently how I avoid any legal issues when dealing with a homeowner seller (or buyer) in a sub to or seller financed transaction. My procedures for this are very simple. I DON’T engage in any transaction other than a straight cash transaction with a “consumer/homeowner”. And in the (cash) transaction I insist that the homeowner have either licensed broker or attorney representation. My purchases and sales are 95% commercial property, and 5% residential INVESTMENT.
  
  This is not to say that safeguards can’t be effectively placed in a consumer to investor transaction, just that I personally don’t need the hassle at my stage of life.
  
  Here’s why investor to investor transactions don’t have the potential legal issues of investor - consumer
  
  1. Not subject to CFPB regulations
  2. Not subject to Dodd - Frank Act
  3. Not subject to RESPA
  4. Not subject to SAFE Act
  5. Not subject to state consumer fraud acts
  6. Not subject to judicial bias in favor of consumer
  7. Not subject to third party interference by consumer groups
  8. Not subject to government agencies trying to “make a point”.
  
  Private Mortgage Financing Partners, LLC
  Website View Page
  1 Reply
- Iain A.
  OP
  New to Real Estate · Port Huron, MI · Member since 2017 · 26 posts · 5 votes
  9mo
  Quote from @Stuart Udis:
  
  @Jason Eyerly Did you actually read @Iain A.'s posts? He’s asking about redemption procedures and hypothetical surplus proceeds, as if those questions matter after the fact. By the time any of that is relevant, the original owner who is still personally guaranteeing the mortgage already has their credit wrecked and a foreclosure on their record.
  I see you have a recent run of posts suggesting your own interest in Subject 2 transactions. The fact you don't recognize the the consequences of a foreclosure on the subject 2 sellers credit shows your qualifications to comment on this subject.
  
  He did a better job of reading them than you did, that's for sure. What is your deal? You have the picture of a man, yet, you act like a Karen. Why?
  All this time, why did you assume the seller had good credit?
  Furthermore, what in my prose would lead you to believe that I had anything but the protection of the existing mortgage in mind? Are you blind the fact that both the seller and I are incentivized in this way? Do you lack the imagination to come up with situations where successive notices of acceleration are missed? Are you too slow to see that these are low-likelihood contingencies I am attempting to game out and understand so as to avoid them?
  I'm not sure how you do things in life, probably very timidly if at all I'd imagine - which is to say BADLY, but for me, I like to understand every single last detail of everything that I can.
  This necessarily includes the procedures I asked about a few weeks ago that you attacked me for attempting to do as if I was somehow flippant with the seller's credit because. What is wrong with you?
  0 Reply
Stuart UdisPro Member
Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
9mo
@Iain A. Why is it that my Mount Rushmore of BiggerPockets clowns is made up entirely of subject-to and alternative financing aficionados? Congratulations, you just knocked one off.
[email protected]
1 Reply
David F.
Member since 2018 · 113 posts · 136 votes
9mo
- OP self described as new to Real Estate

- OP asking for help, but knows more than anybody who’s giving advice.

- OP dissing the BP forums, and REI legends who are offering free suggestions based on thousands of deals

Humorous…sad… OP: please bring value, not insults and arrogance. Good luck with your deal.
2 Reply

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