Sub 2 Docs for that go to Lender

[Paul Boudreaux]

So, I have multiple Sub2 Properties, but I have noticed that later down the road the Seller (Mortgage Holder) wants to obtain a new loan to purchase another property and needs a letter or document showing that we are now paying the mortgage in order to prevent the mortgage from counting against their debt-to-income ratio. Does anyone have a template or letter that they have drafted to address a situation similar to this?

[Doug Smith]

From a lender's perspective, a letter likely won't work. Fannie/Freddie uidelines require that when they are dealing with an individual or LLC, a lender will need to show anywhere from 6 to 12 months of the cancelled checks (front and back) or your bank statements showing the payments coming out. They will take a verification of mortgage from a licensed servicer or property management company, but not from an individual. The other thing to be careful of is if you try and send a letter to the current lender that you are paying the sub-to deal to, you might be firing a starting pistol. Do you really want them to look at the deal and say "hmmm, we didn't realize the borrower wasn't paying this debt...let's call the loan and redeploy our capital at a better rate". My advice, don't rock the boat. It's no secret I'm not a fan of sub to for a myriad of reasons, but if you're going to do it, pay with a check and keep the front and back of each cleared check to provide to a mortgage company to show that it's being paid by you and not the borrower or record. You'll likely need it at some point when the original borrower needs to erase that debt from their DTI.