Subject-to existing financing after notice of default

[Devin Bost]

I'm trying to figure out what options I have with buying properties after the seller has received a notice of default. 

I've heard some investors have success with buying properties subject-to existing financing, but I'm concerned that there may be problems with trying to do that after the seller has already received a notice of default from their lender. 

Does anyone have experience with buying pre-foreclosure properties where the existing financing remains in place? 

[Ron S.]

Originally posted by @Fernando Vargas:

@Ron S.

Correct me if I’m wrong, but from what i know the lastt thing banks want is a home on their hands, because someone did not make their payments. Its a headache and a loss of cash for the bank on short sales, holding the property till everything clears ect. I imagine even more in times like this? So imagine if someone is already behind 7k in mortgage payments then you suddenly bring the loan current and start all making payments on time. I would imagine they wouldn’t mind, they would cash the check. Curious on what you guys think

 Yeah, that would be wrong. Very wrong. They do mind, and in many cases, they (The bank) would be in serious trouble with their investors (Fannie Mae, Freddie Mac, any other investor) if they knew it was a straw purchase or subject to deal, and did nothing about it. 

All of what you stated for why a lender would look the other way is pure urban legend. Does it happen? Sure! Every day! It's not the 90% of the time someone gets away with it, its the time someone doesn't get away with it and pays the price, and in today's climate, it's not just a monetary loss they risk. You take someone's ownership and equity away, you might be up for a criminal allegation needing a defense.