Sub 2 purchase with 2nd lien from Hardship Refinance

7 Replies

I have a lead on a lady who wants to sell on a sub2. She did a cash out refi before 2008, then when the market crashed she was underwater and couldn't pay so she did a hardship refi which took $21k out of the payment, but created a 2nd lien on the property for that amount.

My question is this, is there a way to make a sub2 work without having to pay off the 2nd lien before the transfer of the deed?

I am new to sub2's but there is some equity and cash flow here.

@Brian R.

Medium logo 5545John Horner, Core Developments LLC | [email protected] | 614‑664‑3174 | http://johnbuyshousesohio.com/

What are the terms of the junior lien? When is payment is required? Does it have payments, or only payment in full when she sells?

I have had a very hard time getting these answers from her. It took 3 weeks just to get the remainder on the primary loan.

I don't know when 2nd loan is due.

The Principle and Interest are so low that I really don't think the 2nd is included.

Medium logo 5545John Horner, Core Developments LLC | [email protected] | 614‑664‑3174 | http://johnbuyshousesohio.com/

You can purchase the property (and get the deed) subject to anything, including the 2nd lien. It's just a matter of figuring out the consequences, and risks (if any). You need to know specifically the balances and terms of the loans, and anything else going on with title.

Don't rely on seller info for anything. Do you have an authorization to release info so you can check her actual balances with the lenders? Have you done a title search? Have you looked at both mortgage docs?

Sounds odd, on a loan mod the amount typically "set aside for now" stays as a balloon on that mtg, and doesn't generate a second lien. As K Marie said, you can buy subject to an infinite number of liens, but the question is do you want to.

I have not.  So if I get an authorization to release info I can send to the bank and get into from them directly?  

We have not done a title search yet.  I didn't want to spend the time and money if it was a no deal anyway.  

Medium logo 5545John Horner, Core Developments LLC | [email protected] | 614‑664‑3174 | http://johnbuyshousesohio.com/

Well maybe the 2nd is from something else.  I have just seen these hardship loans before and assumed is was the "set aside for now" that you spoke about.  Like I said she claims she has not been able to get any docs from the bank.  I can't understand why so many people have a challenge doing this. 

@Wayne Brooks  undefined

Medium logo 5545John Horner, Core Developments LLC | [email protected] | 614‑664‑3174 | http://johnbuyshousesohio.com/

Originally posted by @John Horner :
Well maybe the 2nd is from something else. I have just seen these hardship loans before and assumed is was the "set aside for now" that you spoke about. Like I said she claims she has not been able to get any docs from the bank. I can't understand why so many people have a challenge doing this.

@Wayne Brooks undefined

People having a challenge getting loan info from the lender? This is par for the course. It would be funny, except it's not. In a few instances, the bank is giving the borrower the run around and can sometimes make it truly challenging to get complete info. With most of the people I deal with, it's their MO with lenders not to follow through, not know where all their paperwork is, not know their account number, not have proof of payment, call the wrong dept. These are often people who might be running their own business and doing all kinds of other tax and financial paperwork. But when it comes to dealing with their mortgage lender, they are useless.

Always get the ATRI from the borrower first and verify everything yourself. Do this concurrently when looking at the title situation. Then you'll know if there is a deal or not, and whether or not you'll be making an offer.