"Subject To" advice please

[Ralph Pombo]

I could use some quick advice on a "subject to" since I have never done one before. This is a killer deal that will last less than 24 hours. I have a wholesaler that found a subject-to at a great price. There will be some cash up front by me, but I will take over the loan. The seller keeps the loan in their name, the deed goes into my name, but I have power of attorney to pay the loan. Tell me what to look for and which questions to ask. Any advice is welcome. Thank you.

[Jay Hinrichs]

Quote from @Ralph Pombo:

Quote from @Stephanie P.:

Quote from @Ralph Pombo:

I could use some quick advice on a "subject to" since I have never done one before. This is a killer deal that will last less than 24 hours. I have a wholesaler that found a subject-to at a great price. There will be some cash up front by me, but I will take over the loan. The seller keeps the loan in their name, the deed goes into my name, but I have power of attorney to pay the loan. Tell me what to look for and which questions to ask. Any advice is welcome. Thank you.

Lots of pitfalls on this one.

If the deed is going in your name, the due on sale clause will be triggered. This isn't a case where the owner has an single member LLC and needs to transfer it from himself to his LLC, he's trying to sell you the property with financing that's not his to give. Ultimately, you'll have to qualify to take over the loan; it's not a given. The power of attorney will have to be approved by the lender.

Just one girl's opinion.

Stephanie

So then what if you are buying under a trust? I have heard of people that do sub-to purchases all of the time without triggering the due-at-sale clause. If you are keeping up with the payments and no red flags are ever raised, why would they ever call the loan. They want to be paid and that is the main goal isn't it?

Keep in mind what you have in 95% of mortgages are events of default and one event of default is alienation of title which happens when you do a sub too. Now the lender at the Lenders SOLE discretion can then call all sums due and payable and or enter into a foreclosure.  Other events of default are non payment of property tax's  Waste and a few others.. but you get the drift.  in reality you as the buyer has no real risk other than the few bucks your putting up to buy it.. the real risk is on the seller.. the risk of their credit getting trashed if yo dont make the payments and they dont have the money etc.

Most sellers should NEVER EVER do a sub too deal because of risk.