Subject-To: What's the exact process?

[Jason Eyerly]

Hey BP,

So I'm getting pretty interested in this subject-to idea. It is creative investing after all, right? I understand you need a back up plan in case the loan is called on, but it seems some investors have had much success with only one or two ever having a loan called on, and usually they are able to work with the lender on it, or use their backup plan to pay the place off and do as they will. This part I understand. What I don't understand is the actual process from contract to closing, and the insurance. If someone could explain to me the process I'd be really grateful. I'm a bit confused as to what the insurance is that everyone refers to, and what they are talking about when they mention getting a landlord policy with so and so being listed first and then the old mortgage owner and lender being listed as second on the insurance.

All I understand is step one, which is going to an attorney and getting a contract drafted that says you will be taking over payments, they will be transferring the title to you, here's what happens if you don't pay, and here's what's required of both parties.

Also, is this considered speculative? I would imagine that this isn't the go to strategy when the homeowner has equity, so you could only do this on a home where they have paid a small amount of what the initial loan was, or they owe more than the house is worth. In that case, they (or I) would have to bring money to close, is this logical?

Thanks,

Jason