Sub To or L/O?
Hey board,
Got a buyer, 2 liens on the house
1st $128k, 2nd $33k. If the buyer cannot qualify for the full amount of the asking price $164,5k , is it possible for them to obtain a loan to pay off the 2nd, bring up the arrears on the 1st and I'll Sub-To or L/O to them for 3% of the selling price.
= $33,000 (2nd) + $14,000 (arrears) + $3,840 (my 3% fee) ?
Total = $50,840
Sub To or L/O will be $200 over the existing mortgage for either my monthly spread or if it's a L/O it'll be $100 towards the option and $100 in my pocket......
Any thoughts?
Clif 
Greetings
hmmm, sounds a little messy...you said you had a buyer..do you mean you have a SELLER?
if you meant a seller with a house they are willing to sell to you then it sound like a matter of if your willing to either bring the loan current then take over the 1st & 2nd sub-to and make sure that you make all that back on the other end when you sell it.
if you meant that you have a seller with a 1st, a 2nd AND 14,000 in arrears and you are trying to flip it to a buyer without ever bringing the arrears current it seam a bit messy as i said and not quite clean enough to pull off.
1st issue would be a buyer trying to get a loan on a property you don't own and that would not take care of (pay off)the 1st but attempt to transfer title...sure to spark the DOS from whoever's in 1st position...the process of qualifying would probably not work for a buyer in this senerio unless they buy it from YOU at 50-65% LTV and you do a seller carry back for the balance...again i think it's too convoluted a deal for most lenders to want to touch and i thought (correct me any one) the point of doing a "sub-to" deal was to NOT involve lenders and sell the property "owner" (you) finance??
these are just the points that come to my mind..
idea(long shot) get permission from the seller to contact the bank. call loss mitigation and make payment arrangments for the arrearage in the original sellers name.
this will probably entail paying higher notes for several months.
then you can bring in a buyer for $17,000 down (the arrearage plus your fee)
cure the default, get your fee and still get the spread you talked about.
you will most likely not get such a large down payment on a lease option so i would say sell the property via contract for deed with a 2+ year balloon. then have the LSC handle the rest ...they should have no problem refinancing with a paper trail of good payments.
and don't forget to increase the sale price to include 2 years appreciation!
alternativly, if they don't have the 17,000 down make them pay the $3000 then higher payments(to include the default repament money) monthly untill the "down payment" you wanted is met then their payments drop to whatever you had in mind still including your spread.
finally, check with Mr. Locke..he's the expert. i could be wrong...
hope this helps
_________________
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-Rumi
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-Les Brown[ Edited by PurpleMillionair on Date 05/30/2003 ]
HeyPurpleMillionai ,
OK, here it is:
I have a house under contract.
It has 2 liens, 1st $128k, the 2nd $33k.
Total = $161k Total payoff amount, (although I am trying to get a short on the 2nd cause the house is in foreclosure and is up for auction in Aug).
My Q is:
If my buyers cannot obtain financing for the entire purchase price of $161k...but really want this house. Is this scenario feasable?
The possibility of my buyers obtaining financing to pay off the 2nd, bring the arrears current and pay my fee of 3% on the remaining payoff of $128k?(or the 1st)
Total = $50,840
$33k (2nd) + $14k "(arrears) + $3,849 (my fee or down pymt.)
Then I'll L/O or Sub-To the prop. to them.
Can this work? P.S. If I do a Sub-To, it'll be through a trust, won't spark the DOS. not worried about that...interest rate on the house is more than todays, the bank would be fools to excersise that option (they'd get paid less)
Clif