Wrap-around crisis-Need advice

[Latora Harris]

Hello,

I have a motivated seller who has a difficult situation and I'm having difficulty coming up with a solution.

The property was sold last year on a wrap around mortgage to the new owner. The deed was transferred over to the new owner and they claim to have made payments to the bank. Now the original owner has passed but the wife is still alive. The problem is that the property is now being foreclosed on because the original property owner's mortgage is not being paid. The current owner is trying to sell the property to buy out the property to pay off their mortgage completely. They have been unable to contact the original owner's wife nor anyone else with a vested interest in the property. I'm finding it difficult to wrap my head around this entire deal because it seems that there was some sort of disconnect and if the owner were in fact making payments to the bank instead of directly to the owner then how is it that the property is being foreclosed on? We're currently waiting on a signed consent form to get information from the bank, but I thought I'd reach out to see if anyone has had this experience and if so what would be options (other than speaking with an attorney) to get passed this. Your expertise is appreciated.

Thank you,

Latoria Harris

[Jay Hinrichs]

I am very versed with this scenario and for this exact reason I don't at all recommend SUB TOO for sellers as a general rule.

Questions

1. you use owner twice and seller twice who is who.

2. is this property currently rented ? or is the sub too buyer living there or is it vacant?

@Rich O'Neill  only the borrower on the original wrapped mortgage can get mortgage info the new buyer cannot get it unless they have an authorization signed by the borrower on the wrapped note.

OP  if you have the original sellers sig on an authorization you should be able to get mortgage info. I suspect the person who bought this is not making payments.. and this puts the original seller in a very tough situation...  IE they have a loan in their name but have deeded the property to someone who is defaulting.

Remedy.. the person who is defaulting on the wrap you get to sign a Deed in Lieu or you need to foreclose them out.  Original seller contacts bank and brings back payments current and keeps them current why they try to get the current owner who wrapped them off of title.

If the home does not have sufficient equity then this could just be a plain loser and if both the original seller is now in such a deep hole with back payments they may not be able to cure.. and if the new buyer who wrapped them is just fibbing and trying to rip rents... this could easily end up a foreclosure.

its for all those reasons I wish the guru's and coach's would just not recommend Sub too its just a killer for sellers who are not experienced enough in RE to understand how to protect themselves and it allows undercapitalized folks who  think this is a great strategy to get into properties only to butcher them.  And full blown crooks who do this to simply rip rents.. Although if you have a pattern of that you could certainly face criminal charges.