Posted by Alex on November 13, 2000 at 01:45:37:
please send me info on assumiing mortgages without qualifying and risks for sellers
ASSUMABLE MORTGAGES-QUALIFY OR NOT? - Posted by Paris
Posted by Paris on September 09, 2000 at 20:05:26:
When you buy a property from a person who has an assumable mortgage, do you have to go through qualifying (i.e., credit checks, income, the whole process of buying property) or can you just automatically take over their loan? How exactly does that work?
Re: ASSUMABLE MORTGAGES-QUALIFY OR NOT? - Posted by Sean Leonard
Posted by Sean Leonard on September 11, 2000 at 11:39:03:
Just as a side note, OLD FHA mortgages dating back to before 1978 are called “Simply Assumable”. There are few of these left but are fantastic because they can be assumed regardless of credit, cash, etc. They are so old that many of the properties probably have substantial equity. Also, any FHA loan can be assumed however after 1978, the purchaser needs to qualify. In most cases a “full release of liability” is recommended to the seller so that their risk is minimized. Hope this helps.
Re: ASSUMABLE MORTGAGES-QUALIFY OR NOT? - Posted by JohnBoy
Posted by JohnBoy on September 10, 2000 at 01:30:15:
You can assume any loan. You take it over “subject to” the existing loan which means you don’t even tell the bank. The seller deeds their property over to you. You become the legal owner of the property. The loan remains in the sellers name. The seller will remain liable to the lender, you will have no liability to the lender on that loan. The lender still has the property and can foreclose if the payments aren’t made, but the lenders recourse for any losses are with the seller that originally signed the mortgage. The seller would have recourse against you, but the lender would not.
Typically the seller would deed the property into a trust naming himself as the beneficiary of the trust. This is perfectly legal and the lender can not call the loan due under a due on sale clause. Federal Law probits the lender from doing this when transfering title to a trust.
Next the seller assigns his beneficial interest of the trust over to you. This makes you the legal owner of the trust. The trust owns the property. The lender can call the loan due when transfering the beneficial interest. But this assignment does not get recorded. So there is no public record that the beneficial interest has ever been transfered. The only way the lender could really find out would only be if you or the seller told them about it. Now why would either of you do that???
As long as the payments are made on time and kept current then you shouldn’t have a problem with the lender.
To release yourself from any personal liability to the seller, you have him assign his beneficial interest of the trust over to a corporation or LLC that you set up. This puts any liability you would have onto the corporation or LCC and not you personally. You’ve just bought a property with $0 to little $$$ down without having to qualify or obtain any loans in your name and you don’t have any personal liability at stake.
There are some articles here at this site about this subject you can read. There is also more to this in properly setting this up. This is just the basic idea of how it works. So make sure you educate yourself on this subject before just going out and attempting it. They also have courses here that go into detail on this topic. Bill Bronchick has a course here available on this. He is a real estate attorney and his course includes all the proper contracts and disclosure forms you need for doing these types of transactions. You can check them out in books $ courses section of this site for more details. His material is highly recommended.
Re: ASSUMABLE MORTGAGES-QUALIFY OR NOT? - Posted by Jason
Posted by Jason on November 04, 2000 at 07:15:44:
What is the most effective way to find assumable homes?
How do I find properties that are about to be forclosed on?
Re: ASSUMABLE MORTGAGES-QUALIFY OR NOT? - Posted by linda (Phx)
Posted by linda (Phx) on September 12, 2000 at 11:27:52:
Could you then lease option this property or would there be a better option for this?
Re: ASSUMABLE MORTGAGES-QUALIFY OR NOT? - Posted by scott in va
Posted by scott in va on September 12, 2000 at 10:10:44:
Johnboy I understand the concept of this kind of transaction.But what would I say to a seller to make them feel more at ease about keeping the loan in their name.Can I in turn assign my interest to someone esle and how do I make sure the seller is aking the payments.
Re: ASSUMABLE MORTGAGES-QUALIFY OR NOT? - Posted by JohnBoy
Posted by JohnBoy on September 12, 2000 at 11:46:52:
You can L/O it, rent it, sell it, sell it with owner financing by carrying a wrap. It’s your property, you can do pretty much anything you want with it.
Re: ASSUMABLE MORTGAGES-QUALIFY OR NOT? - Posted by JohnBoy
Posted by JohnBoy on September 12, 2000 at 11:45:12:
If the seller is MOTIVATED they want debt relief. If they can’t make the payments, what do they have to lose in letting you take over the loan? If you take over the loan for them, you save them from losing the home to foreclosure, save them from having to make a mortgage payment they can no longer afford, save their credit, rebuild their credit for them by giving them a positive credit rating on their credit report since you will be making the payments on a loan that is in their name.
If your contract allows for you to assign it, then you can assign your interest to anyone you want. If you did assign your contract, make sure you get a signed release of liability from the seller. Otherwise if the person you assigned to were to default, the seller could still hold you liable since they entered into the contract with you originally.
The seller doesn’t make the payments, you do! You would now be the legal owner of the property, only the mortgage remains in the sellers name, but you are responsible to the seller for making the payments. You send the payment directly to the lender yourself. The seller is out of the deal since they deeded their ownership rights over to you.
Re: ASSUMABLE MORTGAGES-QUALIFY OR NOT? - Posted by Marty
Posted by Marty on September 14, 2000 at 13:33:33:
Any Suggestions on where or how to look for assumable mortgages?
Re: ASSUMABLE MORTGAGES-QUALIFY OR NOT? - Posted by scott in va
Posted by scott in va on September 12, 2000 at 12:30:32:
Wont the lender catch on if the payments are coming in in someone elses name and call it due
Re: ASSUMABLE MORTGAGES-QUALIFY OR NOT? - Posted by JohnBoy
Posted by JohnBoy on September 14, 2000 at 14:58:12:
You don’t look for assumable mortgages. You look for “MOTIVATED SELLERS” and just assume whatever mortgage they have on the property. Most mortgages today are not assumable. Those that are will require you to qualify for them through the lender holding the mortgage. Skip all that stuff! Don’t worry about whether the mortgage is assumable or not as far as the lender is concerned. You assume it anyway, without telling the lender! If the seller is MOTIVATED, they won’t care! They will be glad to just get out from under the property. You assume the mortgage “subject to”, which means the you agree to take over the loan for the seller while the mortgage remains in their name. You don’t even get the bank involved. You just do it!
As long as you set everything up properly by having the seller deed the property into a trust naming himself as the beneficiary, and then having him assign the beneficial interest over to you, the assignment is silent and doesn’t get recorded. Therefore, the lender would never know unless you were to tell them!
Re: ASSUMABLE MORTGAGES-QUALIFY OR NOT? - Posted by JohnBoy
Posted by JohnBoy on September 12, 2000 at 13:25:44:
First of all, the lender never pays attention who the checks are coming from. They process hundreds to thousands of checks every month. They don’t sit and read every check to see who the maker is.
Plus, if you had the seller deed the property to a trust naming himself as the beneficiary of the trust, then assign his beneficial interest of the trust over to you as the new beneficiary, the transfer is kept silent since the assignment doesn’t get recorded. The Trustee of the trust sends in the payments every month. The Trustee is who ever you choose. Someone you can trust. Your attorney, your sister, mother, brother, accountant, or even yourself.
On another deal I did that was a L/O, I made the payments directly to the bank in person every month using my personal check. A L/O violates the due on sale clause the same as transfering owenrship does. Every month I made the payment, no one ever even questioned why the check was made out from someone other than the owner of the property. They just accepted my check, stamped the sellers payment book that I kept from the seller, and handed me a coupon stamped showing the payment had been made. No problem!
Re: ASSUMABLE MORTGAGES-QUALIFY OR NOT? - Posted by Marty
Posted by Marty on September 14, 2000 at 13:38:42:
This May sound like a dumb question but after you assume the “mortgage payments” in the manner in which you stated how can I apply for a second mortgage?
Re: ASSUMABLE MORTGAGES-QUALIFY OR NOT? - Posted by olivia
Posted by olivia on October 05, 2000 at 24:30:04:
I think I have found my first motivated seller. I would also like to know how can I apply for a second mortgage? Also, if you don’t mind, explain a little more detailed about the trust issue.