WANTED: Devils advocate, to tell me why this REI tech. wont work. - Posted by Mel FL
Posted by Mel FL on June 16, 2000 at 10:54:31:
I just had this thought, and since I am still a beginer, I can’t believe that I could have actually come up with a new technique.
It relates to taking a property “subject to”. I have made two offers to take property this way and was rejected for the same reasons both times. The sellers were worried that the bank would find out and call the loan. They trusted me but it just seemed shady and kinda below board to them to have to hide it from the bank.
So, I had this thought; What if they gave you a second mortgage for the small amount there due (in my case both of the sellers were a couple payments behind) with the full amount due almost imediatly. Then had them sign a “deed in luo of forecloser”. It seems to me that the bank would then have to let you make the payments to protect your intrest. Thats the way that I understand it, in Florida anyway. Of coarse you wouldn’t report that to the credit bereau. So the credit could stay clean.
The property was worth about 90K seller owed 77. She was two pmts. behind 750 each. She wants $1000 to move with but would probably take less. I offered to give her $500 and take the property “subject to”. The numbers were probably OK to her but she is afraid of having a forecloser on her record. So she said that she didn’t think she would want to do that. I then went into L/O mode. But could I have given her (well technically loaned her) the $2000 having her sign a mortgage the took over her payments without having to ask the bank? The reason that I would rather not L/O are obvious
Less Down Pmt $$ than I could get W/ owner financing being the biggest one. As it is I’m not makeing much up-front cash.
Please tell me why this wont work. I dont know all the ins and outs of RE or forecloser, but from what I do know I can’t see the downsides. I hope someone can enlighten me.
BTW Go easy on me. Its just a thought from a reletive beginner.