Posted by Ed Garcia on November 30, 2000 at 16:24:44:
Steve,
This shouldn’t be a problem that would prohibit the seller from getting a loan. On a bad day, the seller can get a “stated income loan”. What it could do is make the loan more costly. A lot depends on other circumstances and how far out his debt ratio is.
Ed Garcia
Lender’s questions re subject to - Posted by Steve-Atl
Posted by Steve-Atl on November 29, 2000 at 19:16:56:
Last year I bought a property subject to the existing loan. The seller who moved to another state, recently applied for a mortgage on a house there. The seller’s mortgage broker called me (at the seller’s request) for documentation on our transaction.
I don’t like lying, so the idea of a phantom lease agreement is not for me. Therefore, I provided the purchase/sale agreement with the seller showing I was buying the property subject to the existing loan. Also, I provided copies of cancelled checks showing my corporation making the payment on time each month. The broker said this was all they need.
Now the broker calls back and leaves a message on my machine to ask if I formally assumed the loan. Of course the answer is no, and I don’t mind saying so, but maybe its best for the seller if I don’t respond. What would you do? Thanks for any advice.
Re: Lender’s questions re subject to - Posted by Ed Garcia
Posted by Ed Garcia on November 30, 2000 at 11:02:25:
Steve,
It appears to me that the broker is not trying to create a problem for you, but is trying to qualify your seller, his borrower, for a new loan. You have already given him information regarding this matter, and the answer is no. Obviously the loan is still showing in the seller’s name, and is being counted against the seller for the benefit of debt service.
You’ve told us that you’ve purchased subject to, and yet have not assumed the loan. You don’t tell us why, and what was the understanding between you and the seller.
Since you haven’t assumed the loan, and if you were suppose to do so, then I would tell the broker, that I’m in the process of loan assumption. A good broker could work with that information, if given in writing. Don’t put anything in writing you don’t plan to do.
Ed Garcia
Re: Lender’s questions re subject to - Posted by Steve-Atl
Posted by Steve-Atl on November 30, 2000 at 15:38:20:
Thanks Ed for your response. My understanding with the seller is clear. The loan stays in their name and I will not formally assume the loan. I have a letter signed by seller acknowledging this.
I’m not worried about a problem for me. Rather I’m concerned the new lender will not grant the loan to the seller despite the fact I have proved I make their payments on time. Should the seller look for another lender that does not care, or is this likely to be a problem with any lender?