Negotiating the forgiveness of a 2nd mortgage (non foreclosure)

[Markeilsha R.]

Hello,

I'm working a sub2 deal in PA where the owners are eager to move and willing to sell the property for what they owe.  The property is in excellent condition (only 9yrs old), they just would like to get it off their hands.   They owe two mortgages though, and I was wondering how I could go about getting the second forgiven so the debt will be less when I go to resale or lease.

I would also like to know if attempting this would jeopardize or damage their credit in any way, or come back as a tax headache for them in the future. I don't want to do anything that may harm the seller or their credit.

What situations should I use this tactic?

[Account Closed]

I don't like any wrap strategies.  I'd buy it sub2 and rent it out.  Or I'd buy it sub2 and resell it so the underlying loan is paid off.  

BTW, when you lease with an option to buy, there is no "down payment".  There is an option fee or a deposit.  You can choose to make all or part or none of it refundable if the tenant doesn't exercise their option.  Down payments are initial payments against a loan balance.  IMO, using the term down payment on a lease option deal is confusing. And it gives tenants and courts more fuel for the claim that you sold the property to them.