How To Approach People Under Foreclosure To Consider Subject To
Any advice on how to approach people who are in the process of losing their home to consider doing a subject to? It appears as if they are slowly moving.
What would the pitch be?
Like John Locke says, YOU have an ethical responsibility to assure that the underlying mortgage in a Subject-To transaction is paid.
You cannot assign this responsibility to pay the mortgage. Ask any Judge.
[addsig]
jaydub,
Liability never entered into the question asked or answered.
We are talking about Ethics on the part of the investor and since he made first contact with the seller it is his word in what he told the Seller that ethically and morally should be adhered to.
John $Cash$ Locke
[addsig]
axiomonellc,
Glad to meet you.
It would be difficult to do a double closing with a Sub 2 deal as you receive the deed, then unless your buyer was paying cash there most likely would be a seasoning issue with a new loan in signing over the deed in a short period of time.
Sub 2 in not the venue for doing double closings and was not in essence designed to do so.
John $Cash$ Locke
[addsig]
there are lenders that will allow a double closing.
I was under the impression when you do a Sub-2 deal, you take title of the property using and Land trust or Warranty deed; which makes it easier to do double closing.
Did I miss the whole concept of taking title?
thelemur,
Your first step is to find out whose name the underlying mortgage is in, this will tell you if you are being assigned a Subject To deal. Never take a property this way without a Title Report showing all liens and encumbrances.
Your risk is if you are not dealing with the original owner and may not have all the facts on how the original deal was structured.
At this period in time there are many investors looking to "bail out" because of current market conditions, just make sure you are not the fall person and get stuck with a "bucket" in your hand.
John $Cash$ Locke
[addsig]
thelemur,
The idea behind a Subject To deal is that the investor has the deed, otherwise liens or encumbrances could attach to the property being sold to you under a Contract for Deed or Land Contract. I do not see your receiving title insurance on these properties the way it is laid out.
Here is something you should read about Trusts in NC, I have no way of knowing whose method of trust was used, however should things go wrong, you will be in the middle of it.
http://www.thecreativeinvestor.com/modules.php?name=Articles&file=article&articleid=623
John $Cash$ Locke
[addsig]
New Kid,
He would not receive the Deed to the property the way I see the deal being structured, when I sell I hold the deed until the Buyer fulfills the terms of our agreement.
Almost like having the Deed to a HOME an VESTING it to someone else with out giving them the Deed and if anyone does not pick up on this one then PM me and I will type slower.
Only kidding!!! New Kid is one of my favorite posters here at TCI, always excellent advice given to help and I am sure he got the message..
John $Cash$ Locke
[addsig]
thelemur,
Will the deed to the property be in your name or some Trustee whom you know nothing about?
Also, if anything were to go wrong, are you the one going to explain what happened to the Attorney Generals office?
Why are they selling to you on a Contract for Deed if the properties are in a Trust? They must be going to dissolve the Trust take title in another name and then sell to you on Contract for Deed or they would have made you a beneficiary of the trust.
You see the list goes on, I buy from a seller, put the deed in my companies name and sell on a Contract for Deed (period). I do not purchase deals from other investors when they have used the Sub To method, trust method, etc. and took title in their name or a trustees name.
John $Cash$ Locke
[addsig]
thelemur,
There are plenty of Sub 2 deals in Charlotte, that you as an investor put together yourself without having to go to an outside source. This way you know all the facts and some attorney does not tell you what the client told him to tell you.
The attorney I use in NC to handle my deals understands Sub 2 deals and has no problem with them. He does a great job going over the paperwork with my sellers and never has had any problems closing my deals when the time comes for my buyer to re-finance.
From what I read, you want to invest, but most likely are looking for a short cut, meaning have the deal already put together for you by someone else. Surely this is a way to wind up with problems.
How many times have you read about a tenant/buyer in the property who stops paying as soon as an investors takes over, meaning you did not have the say whether they were acceptable to you.
Been on these boards for many years and have read the horror stories from posters dealing with the middleman, on several occasions was requested to help posters get their money back or straighten out the deal.
John $Cash$ Locke
[addsig]
thelemur,
I have had lenders call me and asked for my help, when they have someone they feel needs a break. The last one was from Countrywide, where they had a young single mother that one of their agents was acquainted with.
Your are referring to the Due on Sale clause and in my 500+ deals I have never had a loan called. I do not make it a point to call the lender, I just make the payments on time, this seems to pacify them. Right now their plates are so full with foreclosures, I am pretty sure they do not need to heap on houses that the payments are being made on.
Do not take what I said as a slam against you, it is just someone calls you says they have rental properties only they hold the deed and not the mortgage, but kind of let this slide over until you investigate. I was just trying to make a point, that you need to know when to hold them and when to fold them. Or what the correct questions are, to save you time and energy from chasing after deals and this goes for everyone in the creative real estate investing industry.
One of my favorites: "Training gives knowledge, knowledge gives confidence and confidence gives victory"
John $Cash$ Locke
[addsig]
did you pull the plug too quickly and not just review the pre-lim?
Maybe I missed that.
Huh? the pre-lim HUD?
Quote:
On 2008-06-28 19:13, cjmazur wrote:
did you pull the plug too quickly and not just review the pre-lim?
Maybe I missed that.
pre-lim title report.
It would tell you who owns the property, liens, chain of title, etc.
Quote:
On 2008-06-28 19:23, thelemur wrote:
Huh? the pre-lim HUD?
Quote:
On 2008-06-28 19:13, cjmazur wrote:
did you pull the plug too quickly and not just review the pre-lim?
Maybe I missed that.
Oh I just checked the tax records. It shows the current owner and sales history. No need to spend $
Now how do we get John Locke back in here to spill the beans on his insurance secret haha.