Preforeclosure - Taking The Mortgage Subject To...
Currently working on a subject to deal. The property currently has a notice of default against it. I've heard some experts say to be upfront with the lender and tell the lender that you're doing the subject to deal. Others insist on "hiding" the transaction, hoping that the due on sale clause won't be triggered.
While I don't have a problem with those that want to keep the transaction quiet, for me personally, I'd rather not dance with the devil and get a good night's sleep knowing that I haven't done something too risky and that the note won't ever be called on me. So, if I want to play this conservatively...
What happens when I inform the lender? Am I going to be forced into taking an assumption agreement and take liability for the loan if they're flexible? If they qualify me, how stringent is the credit check? Are we talking something similar to a "stated income/no ratio" level of qualification? Or are we talking a "full doc" level of qualification? Can I get their approval to take over the loan subject-to without an assumption agreement or is this almost impossible? What agreements do I need to get from the lender? Is there anything I can give the lender to sway them onto my side? (Lender is Chase Manhattan, if anyone has any insight.)
The problem is they will probably not do it without getting approved for the loan - a new loan. They can also call the loan in at any time if they do let it slide now. It would be the same as just keeping quiet and take your chances.
If you told them and they said no, they might be watching and call the loan due when property transfered. I would not recommend talking to the bank about subject to. Especially with the interest rates low. When they come back up over what the loan is they might start looking at them, and calling some in.
I believe that Mortgage Companies work on a "Don't Ask, Don't Tell" mentality. I sleep very well every night and this is why.
If you don't say anything. The mortgage company is happy. They are getting payments on a loan. Without you, the mortgage would be in default. You are HELPING them out.
If you tell them how you are helping them out, they will NOT give you a medal.
They will then be under an obligation to call in the note, or keep an eye on it, etc. This will cost them money for employees, assumption packages, paperwork etc. all to get the exact same results!
Honestly, I feel that the Mortgage companies would rather not know and just keep the monthyly payments rolling in on time.
Hope This Helps,
Mrs. Meltzer