Subject To assistance needed

[Jodi-Ann Birch]

Good day, 

I am relatively new to REI and I have a potential subject to deal I am looking at in Cleveland Suburbs and could use some help. The loan payoff is $47,000.00 with 14k past due. The rental potential and areas would allow me to cash flow when all other expenses are added. I am not sure about the process I should be following or where to ask for help so I am asking here?

1. I am only looking to take over the existing payments and not the back payment. Is this the right approach? Or do I pay the past due and then start making payments on the existing loan? is this the best subject to approach?

2. I will need to make sure the bank is not looking to foreclose or take the home given the past-due amount stated above?

3. Do I need to verify the existing loan amount at or before closing?

4. I am looking to verify the mortgage type (fixed or ARM). ARM is not the preference esp if the rate is about to adjust or would result in a loss of cash flow potential. Is this approach ok?

5. Should I use a title company for this as well? 

6. Do I get insurance in my name or let it stay in the owner's name?

7. How would I know if the bank has a Due on-sale clause?

8. How do I know to keep abreast of any key communications related to the home esp from the bank if the loan will not be in my name? Does it matter?

8a. Should I utilize an authorization to release information form and where would I go to find these or get help?

[Wendy Patton]

@Jodi-Ann Birch.

Good day,

I am relatively new to REI and I have a potential subject to deal I am looking at in Cleveland Suburbs and could use some help. The loan payoff is $47,000.00 with 14k past due. The rental potential and areas would allow me to cash flow when all other expenses are added. I am not sure about the process I should be following or where to ask for help so I am asking here?

1. I am only looking to take over the existing payments and not the back payment. Is this the right approach? Or do I pay the past due and then start making payments on the existing loan? is this the best subject to approach?

Someone must pay the past due or the home will go into foreclosure - does the seller have the money to do that?  if not, you need to bring it current for sure.  

2. I will need to make sure the bank is not looking to foreclose or take the home given the past-due amount stated above?

They won't if you pay it in full before the foreclosure sale.

3. Do I need to verify the existing loan amount at or before closing?

asap before you close - AND you should be getting set up on their mortgage account to have full access to it - 

4. I am looking to verify the mortgage type (fixed or ARM). ARM is not the preference esp if the rate is about to adjust or would result in a loss of cash flow potential. Is this approach ok?

Read the mortgage -  you need a copy of it anyway

5. Should I use a title company for this as well?

YES!!!!  otherwise there could be other liens you aren't aware of 

6. Do I get insurance in my name or let it stay in the owner's name?

your name will be the owner and their names will be on the additional insured - and the lender will be named as the lender 

7. How would I know if the bank has a Due on-sale clause?

They all do

8. How do I know to keep abreast of any key communications related to the home esp from the bank if the loan will not be in my name? Does it matter?

getting on their account - 

8a. Should I utilize an authorization to release information form and where would I go to find these or get help?

Read my book from Amazon on this topic - i just updated it for 2023 and that should REALLY hellp