I did quite a few myself in the early years. But as I expanded, I quickly realized that credibility would become a big issue. Also the fact that I had heard of some deals blowing up because the seller would have remorse years later.
By having an attorney doing the closings, it squelches that pretty quickly. And it creates peace of mind for the seller. They get a HUD-1 statement and they sit in a nice conference room and they get a closing packet from the attorney.
The sellers feel good, we feel good. High credibility and legitimacy. Life is good when you don’t have to explain and defend yourself all the time.
I have heard and seen all kinds of disasters made by newbies. Cross my fingers, we have not made any “disasters” over the years. But we have had deals that have not been very profitable! Not a disaster but certainly not fun working for free either!
In buying a property “Subject To” the existing mortgage so the “Due on Sale” clause is not triggered, would the buyer, using a standard real estate purchase contract, simply insert their name (Joe Blow &/or assigns)and then when re-selling to their prospect, simply assign that original contract to their buyer? (Hopefully I’ve explained asked this question clearly) To protect oneself, what needs to be recorded if anything? Any and all information is greatly apreciated.
Personally, when dealing with institutional lenders, I don’t ever worry about Due on Sale. It is almost a non-issue. They simply want the payments and that is what we do. They get Internet/Electronic payments and it is never a problem.
We submit address changes, change insurance, and do whatever we have to do with little worries because of our POA.
Our attorney handles all of our “subject to” closings including recording the deed and it is never a big issue.
Due on sale is overrated. Yes the lender could call the loan due for any number of reasons, such as transferring title, not keeping enough insurance, not keeping up the house.
The lender could call the loan due at ANY time pretty much.
Your described method seems pretty good to me. I’d just make sure that you get completely out of the picture though. Have the seller and end buyer sign something else releasing you from all liability.
If you change the name on the deed without the approval of the lender, the Due On Sale is triggered. Since the DOS is standardized wording in “conforming” loans, the terms are pretty much the same no matter who the lender is. Also, in some states changing the name on the deed may also trigger transfer taxes.
Posted by Natalie-VA on April 13, 2007 at 07:55:45:
Matthew,
Thanks for mentioning that your attorney does the closings. I think there are quite a few newbies out there who think they can just do it on their own.
