Taking over Payments

You didn’t come this far to stop

What is Subject-To?

A "subject-to" transaction refers to purchasing a property while keeping the underlying mortgage intact, essentially assuming responsibility for the existing mortgage. The term "subject-to" is mentioned on HUD statement lines 203 and 503, signifying that we are acquiring the property subject to the existing mortgage terms. Despite its long history, some seasoned investors and brokers may not be familiar with the subject to strategy, and may raise concerns about its legality. However, the IRS recognizes and acknowledges the subject-to strategy.

The term "subject-to" is even listed on the HUD statement, and the IRS provides information on the subject in Publication 537, which can be found at this link: Hud Example

The seller is also protected by a document called a Deed of Trust , and Promissory Note enforced by the closing Title Company. A Deed of Trust is a legal document that allows a borrower to transfer the ownership of their property back to the original owner to avoid lengthy foreclosure and lawyer fees. This document is completed at closing and drafted by the Title Company.

How am I protected

Do you make payments to me, then I pay the mortgage?

No, we want this to be as painless as possible. so we will pay for a loan servicing company to service our agreement.
A loan servicing company is a third-party entity that manages loan-related tasks such as collecting payments, sending statements, and ensuring that the borrower stays up to date on their payments. This helps the seller have peace of mind, knowing that their investment is being professionally managed.

How do I submit information to take next steps ?

In order to present your seller with a tailored offer, We will need some specific information about their situation. Don't worry, while some of the questions might seem a bit personal, they're essential for us to dive deep into the details and create an offer that's a perfect fit. Here are the key pieces of information I need to send the perfect offer: We will need the following information.
*Full Address
*Loan Amount Remaining
*Interest rate
*Monthly Payment
* Major Repairs Needed

What happens if you stop paying?

In the highly unlikely event that we are abducted by aliens and unable to make payments, the property would be transferred back to the seller through the Deed of Trust. This means that the seller would keep all the funds we’ve paid so far and regain possession of the house.

What happens after I send property information?

We’ll take a look at the information that you provided and may contact you by phone to get additional details about your situation and the property that you want to sell. Then, after considering all of the specifics of your home, we’ll usually be able to come up with a fair and honest offer on your property that’s a win-win-win for all of us. And once you have an offer from us, there’s no obligation whatsoever for you to accept it. We promise that the decision of whether or not to sell your home will always be totally left up to you. If you do decide to sell your home to us, the process will go fast and you even get to pick a closing date that fits your schedule!

Extra layer of protection?

Placing the property in a trust can provide a layer of security for both parties. Here's how it can work:

• Establish a Trust: Create a trust with the property as the main asset.

• Owner as Beneficiary: The current owner of the property becomes a beneficiary of the trust.

• Conditional Transfer: Set conditions within the trust document that specify under what circumstances the property will revert to the owner. For example, if certain payments are not made or obligations are not fulfilled by the new party, the property automatically reverts to the owner.

• Automatic Reversion: This mitigates risk because the property does not need to go through a lengthy foreclosure process to be returned to the owner. Instead, the terms of the trust ensure that the property reverts back automatically under predefined conditions.

The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information.

When a borrower is obligated on a mortgage debt - but is not the party who is actually repaying the debt - the lender may exclude the full monthly housing expense (PITIA) from the borrower’s recurring monthly obligations if

the party making the payments is obligated on the mortgage debt, there are no delinquencies in the most recent 12 months, and the borrower is not using rental income from the applicable property to qualify.

In order to exclude non-mortgage or mortgage debts from the borrower’s DTI ratio, the lender must obtain the most recent 12 months' cancelled checks (or bank statements) from the other party making the payments that document a 12-month payment history with no delinquent payments.

Review actual sample of subject in HUD statement in lines 203 and 503

What about my DTI when I am ready for a new loan?

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The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information.