Can I use a "Sub To" to Negotiate Short Sale?

[Jeff L.]

I have a seller that has spoken to me at length about selling his home but, on the advice of his attorney, told me he will not communicate with Chase(the lienholder) and will not sign a 3rd party authorization to allow me to negotiate a short sale.

However, if I were to get him to agree to a "sub to", would this allow me to negotiate a short sale with Chase?

The seller said he is "pulling for me" but on the advice of his attorney he cannot communitae with Chase. The house has been abandoned and no payments have been made in for 3 years. He has not filed bankruptcy and the home is not in foreclosure. It went to auction in April of 2012 but did not sell and Chase did not claim it as an REO it reverted to the sellers name.

Any advice would be helpful!

Thanks,

Jeff

[Account Closed]

You CAN take a property subject-to its existing financing and then, as the new owner, negotiate a discount with the lender. I did one last December (lender was HSBC), and I'm in the process of buying another. No borrower participation, no listing, no hardship documentation. The challenges are 1) most lenders won't discuss the loan with anyone but the borrower, so the authorization to release could make or break possibility of negotiating, and 2) the lender may or may not agree to a payoff, just like any other short sale. So the agreement with the seller has to clearly spell out that foreclosure may happen and that the new buyer be held harmless.

CA civil code clearly states that a lender has to give a new owner (successor in interest) payoff amounts and full accounting statements relating to the loan, and there is a fine for not doing so. The lender must allow a new owner to pay off the loan. However, there's nothing that makes it so the lender has to negotiate the amount. So there is definitely an element of risk, but it can be done.

The other issue here is the condition of title in the OPs scenario. Perhaps he can explain what he means by the bank not taking it back as an REO and title reverting to borrower. Is that an NC thing? Can a lender refuse a deed after foreclosure sale where there were no third party bidders?