A few Sub2 questions JimFL, sub2 practitioners? - Posted by Pat IN
Posted by Pat IN on February 01, 2002 at 07:21:29:
First, I’d like to disclose that I’m not a sub2 guy, yet. Also, I know I probably need to get a good sub2 course in the future, however, I have had a few nagging questions (pitfalls of buying sub2)? about aquiring properties “subject to”?
Here they are:
When buying sub2, what happens if after you (buyer) “Get The Deed,” the seller, who still has the loan in their name, files bank ruptcy? You now have the deed, so technically you are the owner, however, what happens to the underlying loan, how will this affect you, the (buyers) position “who has the deed”?
What documents do you provide to a lender or (mortgage broker) when ready to refinance, or have your tenant/buyer refinance (once they qualify)?
What would happen if you finally aquire a property “subject to” and you have your seller sign a CYA letter, disclosing that their loan has a “due on sale” clause in it, and then for some reason, the loan is called due? Your tenant/buyer can’t qualify to refinance immediately, you (buyer) in the middle can’t qualify either, nor do you (buyer) have any cash reserves to help get you through, so the loan is called, and because there are no funds to satisfy this debt, the lender forecloses? Can the original seller, sue you (buyer) for a performance issue (relative to your agreement to buy sub2)? even though you had the seller sign CYA letter? Will this hold up in court?