"Subject to" purchase

[Irina Belkofer]

Hello everybody!

I have few questions about buying a house "subject to": the owner of the house is kind of under water so by buying subject to, I'll let the owner off the hook from the mortgage by paying it.

However, I have to make sure that bank won't enforce due on sale clause when seethe new insurance.

Besides, I'll have to assume POS violations and do all the repairs, which is $8-10K, so I can't afford loan to be called off by the bank.

So, where do I start with the bank?

I'm assuming it's like negotiating a short sale - start from authorization to disclose info? Then what?

I'd appreciate if someone done these deals before and could tell me what docs I need for the mortgagee? 

[Brett Goldsmith]

A Subject-to and a short sale have nothing in common. Are you looking to take an underwater property subject-to or assume the mortgage? Most mortgages aren't assumable. 

If a home is upside down you may want to consider trying to purchase it via a short sale instead of taking an underwater asset and incurring liabilities on a subject-to. I do understand that there may be some rare situations where a subject-to on a slight underwater home may make sense if there is an extreme value add or speculation play at hand with little out of pocket.