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Jackie,
In one of the other posting areas (Creative Fiancing) you mentioned that you would rather do seller financing vs. subject-to.
Would you explain the difference? I have not used a seller finance but may be something I look to do.
What paperwork do you use different for seller financing than for subject-to? I assume you use a TRUST for either of these types of deals.
Also, you mention wrappng the wrap…is this to mean the contract for sale that you establish with a buyer wraps the contract to buy that you have with the seller whether it is a sub-2 or a seller finance?
-patrick
Hey Patrick,
The problem with subject to deals is that is is not fair. You get the deed and the seller still has the legal liability for the loan. But, if you get abducted by aliens, there is not a darn thing the seller can do to quickly get the house back. Yea, they can sue you – but that could take two years and cost thousands of dollars. Meanwhile, their house would be foreclosed.
So… instead of a regular subject to deal, I buy with seller financing. It’s still just taking over the payments on the underlying loan. And it is still the same terms that mirror the underlying loan, it’s the same payment, etc… the only difference is the sellers get a Deed of Trust or Mortgage and a non-recourse note so they can foreclosure to get the house back if I vanish.
It makes them feel better. They are protected just like a Bank of America or Wells Fargo ( are they still in business?)
And — this is the biggie — if I have to stand in front of a Judge to explain the deal – how do you think the Judge will feel about a subject to deal? vs a seller finance deal?
You want to ALWAYS conduct your business in a fair and honest manner — seller financing is much more fair than a subject to deal.
Jackie
p.s. I’ll be doing an online seminar about this in January.
Jackie,
I hear what you are saying about protecting the seller (or at least protecting yourself from predatory lawyer types who would view a sub-2 as a way to “screw” the seller).
My only concern would be that once you go to closing with your RTO buyers in 12 – 24 months, the original owner has to sign off on the deed. There could be a possibility that they renigue on doing so, or better yet, having to find them to get their sign off could be a hassle.
-p
Patric,
the seller does not have to sign off on the deed. YOu still GET THE DEED.
the seller only gets a note – just line Bank of America or Wells Fargo gets a note when they hold a mortgage or deed of trust. Bank of America does not have to “sign off” on the deed when you sell and neither will the seller when you buy with seller financing.The title company will request a payoff statement from the seller UNLESS you can provide one.
If you arebuying with a note that mirrors the underlying loan, then the only payoff statement the title company will need is the payoff from the underlying lender.
You will need a release of the lien – but that’s what power of attorney’s are for!
jackie
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