All Forum Posts by: Drew Smith

I have a property under contract to take it subject to. When I met with the title company, whom I know does a lot of wholesale transactions, we discussed subject to's, wraps and contract for deeds. The escrow agent said they prefer subject to's. The escrow agent said in "speaking with our attorney since the current mortgage on the property has a due upon sell clause and right to call note if not owner occupied; we cannot close this or be a party to it if the current lender is not aware and agrees to the transaction." I explained that I was aware of the due on sale and had the funds should the lender elect to exercise that option, but planned to be upfront and was relying on them to prepare the paper work, whether it be a limited POA, disclosure letter, etc to the lender.

Her reply was, "The problem is not closing it; the problem is insuring it without risk to our company. We would like to know if these are being insured elsewhere and the verbiage they are using to do so when it does come to the due on sale clause."  It seems to me that when she told me they do subject to's, she was talking about assuming the mortgage.  

Has anyone dealt with this issue?  To me the title is clean but the mortgage remains an encumbrance on title, so I'm not sure what the problem is with insuring title.  I appreciate any insight to this situation.

Thanks,

Drew

I will be there

Thank you all for the feedback. I've requested additional information and possibly getting a copy of the loan docs that would be used to help answer some of the unknowns. I'll add some more detail when I get the information.

I currently have 7 rentals (SFR) and I am in the process of setting up a LLC. I am going to refinance 5-7 of the properties in the name of the LLC. I've been in discussions with with a director of private banking at a local bank but in order for her to be involved she wants to wrap them into one commercial loan. Each property currently cash flows $100-$150/mo on a 15 yr, 6% loan. If I refinance as a consolidated mortgage, I can put them on a 30yr, 5%, 5yr balloon, and create an extra $1750/mo cash flow to reinvest. Has anyone done this type of strategy? I realize a few of the pitfalls but would like to here other people's thoughts on this. Thanks,

Drew

I am planning to be there.  Thanks.