Seller will finance...help me put this thing together

[Archie Knuckles]

- ARV $350k
- Owes $85k
- Asking retail price
- Seller will consider taking his equity in monthly installments as long as I pay off his underlying loan at closing
- Condition: good, ready to sell
- GREAT highly-desirable area

I'm thinking pay off his underlying loan with private money and simply create a 2nd position note to the seller for his equity.

Since he wants retail this wouldn't be a good one for me to hold, but I'm thinking why not put the deal together and simply assign it to an owner occupant for a down payment/assignment fee. I.E. a "mortgage assignment." The buyer's monthly payment would go to the seller and private lender in a split.

I'm not a big proponent of mortgage assignments but if it's legal and I disclose EVERYTHING to EVERYONE why not.

Any thoughts?

[Jon Holdman]

No matter what anyone says, you are in no way assigning any mortgage in a deal like this. Even the folks pushing this process have started calling it an assignment of the mortgage payments, which is more accurate.

You're doing a subject to deal. You're buying the property with two loans, then selling the property subject too. I guess your cut is the down payment.

A big difference between this and the mortgage payment assignments is the YOU are the one on the hook for these two loans. You're selling a property subject to. I'm personally not comfortable buying properties subject to and I can guarantee I would never sell subject to. You give up all rights to the property but you're still on the hook for the loans.

If I were the private lender in this scenario and you did this I would foreclose so fast it would make your head spin. But then I would never fund a deal that had the second behind me to start with.

If you want to do this right, let the buyer assume both of the loans and give the two lenders the right to approve that assumption.