Sub2 And Back Payments

So, I have a question. When you get control of a house with the Sub2 method, do you make up any payments that haven't been made by the seller or do you wait and pass those on to a buyer from the money you get from their down payment?

Thanks

Comments(4)

  • jeff1200213th October, 2003

    Someone has to make up the back payments. if the owner could, they would have done this before you came along, so they're out. This leaves you, or your Buyer. It's your responsibility to make sure the payments are made. You can either do this with money out of your pocket, or with deposits you've collected from your tennant buyer. It is in your best interest to make the payments as soon as you take posession of the property. This avoids additional penalties, etc. and it makes you an honest investor. YOU told the owner of the property that you would make their problem go away. YOU made the promise, YOU should take care of it quickly.
    Good Luck,
    Jeff
    [ Edited by jeff12002 on Date 10/13/2003 ]

  • JohnLocke13th October, 2003

    kingmonkey,

    Glad to meet you.

    Some people are of the assumption that sellers are behind in payments when doing a Subject To deal. Nothing could be farther from the truth.

    The secret is finding the buyers before they get behind or get in trouble. You are looking for symptoms at this point. This way all you need is U-Haul money (moving money) to give the buyer.

    The majority of the deals I have done the seller was current on his mortgage, so there was not large out of pocket expense.

    However, if your seller is behind, then you are morally and ethically responsible to make up the back payments, albiet by selling the property to get the money or coming out of your own pocket.

    If you are just starting out then make darn sure you feel the property will sell so you can get the money to make up the back payments.

    Remember though you will need a letter from the lender that says they will re-instate the loan under the terms and conditions the seller or (you as a financial advisor) reach with the lender.

    A little more to it than just sending in the payments and hope the lender accepts them when a seller is behind.

    John $Cash$ Locke

  • InActive_Account13th October, 2003

    Say for example the home is behind in payments. Is there a certain time limit that it has to be paid by to make the forclosure stop? Do the lenders care if the seller is selling subject to? Won't there be a due at sale cause?

    [ Edited by Alexis on Date 10/14/2003 ]

  • InActive_Account14th October, 2003

    I answered all my own question's.

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