Posted by Heather -Tx on September 19, 2003 at 21:15:11:
Can and do … two whole different worlds apart Yes they can, but rarely due AS LONG as you keep their money coming in on time every month. As interest rates go up though… this may change… I’m keeping my eyes open for that for sure.
I am still new, and only have a couple full rehabs down so far… but the first one I bought sub2 and had no problems whatsoever. That was with Countrywide, your milage may vary
Posted by Jeffrey Hunter on September 19, 2003 at 11:39:40:
Hi. I needs some advice on subject-to deals. I’m new to RE Investing and decided to purchase a RE Flipping course online and also take an RE Principles class from a local community college. I’m a bit confused on the topic of Due-On-Sale clause. My Online Study course says that the banks would not blink if start sending in payments instead of the owner, however, my RE Instuctor says that it would trigger the due-on-sale clause and the bank will call the loan due. Which is true? Are there any experienced Subject-To investors out there?
Due-On-Sale clause contained in a mortgage or deed or trust gives the lender the *option to require complete payoff of the underlying loan if the property is sold or if the title is transferred.
However banks rarely enforce the DOS because the process of calling in loans is not profitable. It would make sense if the interest rates were high & the banks force the borrowers to refinance.
It does trigger due-on-sale clause if the “title” is transfer. In my opinion, your instructor shouldn’t just give you his opinion that the bank “will” call it… I would say they might if the circumstances are favorable to them.
A way to get around that could be asking the seller to deed the property to his holding trust. Have you(or your Corp.) to be the beneficiary of the trust. Then notifly the lender & the insurance company that the seller gives his/her deed to the trust.
Posted by David Garcia on September 19, 2003 at 13:50:28:
The DOS is a lender policy not a federal law. Banks have the option to execute the DOS. However most banks dont care as long that they receive their money.
I bought a home in NC Subject to the mortage with American Financial & they received my payment in person with no problems. This despite the fact that I didint have any credit.
Yes they can, but rarely due AS LONG as you keep their money coming in on time every month. As interest rates go up though… this may change… I’m keeping my eyes open for that for sure.