SUBJECT TO Mortgage Forclosed On!!
I purchased a property subject to 3 mortgages on the property. My intent was to rehab it and sell it outright. One of the mortgages had a baloon payment date and I was calling the banks bluff that they were not going to call it. Well, they did. I am not entirely sure what paperwork was sent but I got a call today from the lady I bought the property from.
What can I do??? I only need a few more months. I live in Iowa. THANKS
Frogger,
When you take a property "Subject 2" you must adhere to the terms of the existing financing that you've agreed to take with the property. If a balloon payment was due, the bank isn't calling the loan due, they are expecting the payment that is due according to the terms of the loan. You are obligated to make the balloon payment. This might be a good time to try seeking financing or a partner.
Good Luck,
Jeff
When you take a house Subject to you are expected to play by the rules, which are quite simple. Nowhere does it say that you can take your sweet time rehabbing or anything else. You buy Subject to, and when the seller vacates the house you sell it!
The way you used Subject to is way too risky, now you better refinance the loan to take care of the balloon payment and look at all the other mortgages too, when are they due, do they also have a balloon payment?
Get the paperwork for the refinancing going Monday morning early, and be sure to tell the seller that you are taking care of it.
By the way, how come the lender called the seller? Didn't you have an authorization letter for the lender, in which the address change is mentioned?, if not, I am afraid you didn't have all the paperwork done for a Subject to.
Don't try changing the rules, you will ruin opportunities for other CRE investors using Subject to.
Do you have the Subject to manual? if not you better get it and read it and do exactly as it says, and above all: play by the rules!
Wish you success on the refinancing(s)!
Ladybug
I know I did not do a true subject to purchase. It is a lot more complicated than I explained and very risky at that but I had to take the deal to get started in the REI business. Although I'm guessing there isn't much for me to do considering I am unable to get a refinance loan. Thanks everyone that posted a reply.
Dude,
STOP what you are doing.
Slow down. I have never in my life Had to take a deal. I've even walked from a nice equity deal because the owner was acting strange.
Because you didnt do the sub-to right, because you thought the bank was "bluffing" ( on a payoff date ) you may now get the original homeowner in even deeper credit problems, and your giving all of us a bad name.
If you dont get an education in investing, your going to be broke yourself.
I love your motivation, but do it right and you'll actually make some money.
Thanks again. I did all of this very uneducated and before I found this site or anything about subject-to investing. I was going by the advice of my attorney (which I have now found a new one) which had no INVESTING knowlege. Although I am unsure how to correct my mistake, I know how to do things better in the future. THANKS AGAIN
OK, this will be a lesson not to do anything about which you have no knowledge.
Now, how much time is there for the balloon payment? Can you get a partner to get the refinancing? That way your seller might get out of trouble.
Or, ask the lady seller if she can get refinancing on that particular mortgage with the balloon payment, and you should offer to take care of all the extra costs this entails for her. Be a gentleman, and aside from deeply apologizing to the lady seller, say that you will pay her back any money she will have to pay for the refinancing, and do so in writing, notarized. If this has been done, you should be responsible for the monthly payments on that new refinanced mortgage, get going with the rehab and finish as quickly as possible, sell and get out of trouble.
In the meantime, get John Locke's Subject to manual, read it and do your paperwork correctly, and have it reviewed by an attorney.
I think this is the correct thing to do and I strongly suggest you do so. I am sure we, here on the forum, are all willing to help you where needed.
Good luck to you!
Ladybug
Where do you get the manual?
http://www.thecreativeinvestor.com/Product19.html
Please forgive if the TCI url does not post.
Greg[ Edited by appelgw on Date 09/09/2003 ]