Investor Offer to Assume Mortgage - Legit or not?

[Susan McBride]

Hello. I just received an offer from Mono RE LLC / CDK Investment to purchase my home, which is currently on the MLS, at the full listing price. It seems too good to be true and I am currently trying to research the company. I have asked for their EIN, state of incorporation and names of principals and also a copy of the detailed contract.

It's not a traditional purchase offer.  They are offering to cover all closing costs except the seller commission, give me 45% at closing ($33k) and the remainder ($48k) over 360 months.  The mortgage remains in my name, but they have full use of the property.  If they default, the home reverts back to me and must be returned in the same condition. 

Below are the FAQ's they sent with the offer:

What Kind Of Offer is This?
This offer is based on a subject-to-arrangement. In contrast to a standard cash or hard money offer,
the current loan isn't settled at the closing stage. Rather, the pre-existing debt remains under the
name of the seller, while we, the buyers, assume responsibility for all payments. The gap between the
remaining loan amount and our complete offer price is given to the seller at closing.
How Do You “Take Over Payments”?
During closing, two key documents are drafted for subject-to-transactions: a Limited POA and a
Promissory Note. The Limited POA allows me, the buyer, to make mortgage payments on the seller's
behalf. The Promissory Note outlines the monthly payments and duration, matching the seller's
existing mortgage terms.
What Happens If We Default?
To ensure sellers feel secure, our contract explicitly states that if we miss even one payment, the
seller regains full ownership of the property within 30 days. If a payment is missed, may take the
property back under the terms of the promissory note we will create at closing, and the seller keeps
all upfront funds and the property, which they can then resell or use as they wish. The contract also
requires us to return the property in its original condition in case of default. We're open to adding any
other protective clauses as needed. We are professional buyers committed to fair and secure
transactions.
Who Pays Closing Costs?
The buyer covers all title fees for both parties. The seller is responsible for the listing agent
commission and any outstanding liens or back taxes
Key Points:
This is not a loan assumption; the loan remains in the seller's name.
The seller stays in the second lien position until the loan is fully paid.
The buyer handles all future property repairs and maintenance

I would love to hear from the BP community about whether this is legit and what exactly this company's end game is (how are they using the property and how are they making money).  Of course, I only have an offer at this point and no actual contract.  Thanks!

[Jay Hinrichs]

Quote from @Account Closed:

Quote from @Raye Mayhorn:

Quote from @Susan McBride:

Hello. I just received an offer from Mono RE LLC / CDK Investment to purchase my home, which is currently on the MLS, at the full listing price. It seems too good to be true and I am currently trying to research the company. I have asked for their EIN, state of incorporation and names of principals and also a copy of the detailed contract.

It's not a traditional purchase offer.  They are offering to cover all closing costs except the seller commission, give me 45% at closing ($33k) and the remainder ($48k) over 360 months.  The mortgage remains in my name, but they have full use of the property.  If they default, the home reverts back to me and must be returned in the same condition. 

Below are the FAQ's they sent with the offer:

What Kind Of Offer is This?
This offer is based on a subject-to-arrangement. In contrast to a standard cash or hard money offer,
the current loan isn't settled at the closing stage. Rather, the pre-existing debt remains under the
name of the seller, while we, the buyers, assume responsibility for all payments. The gap between the
remaining loan amount and our complete offer price is given to the seller at closing.
How Do You “Take Over Payments”?
During closing, two key documents are drafted for subject-to-transactions: a Limited POA and a
Promissory Note. The Limited POA allows me, the buyer, to make mortgage payments on the seller's
behalf. The Promissory Note outlines the monthly payments and duration, matching the seller's
existing mortgage terms.
What Happens If We Default?
To ensure sellers feel secure, our contract explicitly states that if we miss even one payment, the
seller regains full ownership of the property within 30 days. If a payment is missed, may take the
property back under the terms of the promissory note we will create at closing, and the seller keeps
all upfront funds and the property, which they can then resell or use as they wish. The contract also
requires us to return the property in its original condition in case of default. We're open to adding any
other protective clauses as needed. We are professional buyers committed to fair and secure
transactions.
Who Pays Closing Costs?
The buyer covers all title fees for both parties. The seller is responsible for the listing agent
commission and any outstanding liens or back taxes
Key Points:
This is not a loan assumption; the loan remains in the seller's name.
The seller stays in the second lien position until the loan is fully paid.
The buyer handles all future property repairs and maintenance

I would love to hear from the BP community about whether this is legit and what exactly this company's end game is (how are they using the property and how are they making money).  Of course, I only have an offer at this point and no actual contract.  Thanks!

 Hi Susan,

I just receievd an offer on one of my listings in Texas from the same company. I am very familiar with the ''Subject To' process but it is not for everyone as the seller is still resposible until the loan is paid off. I am trying to find anyone that has done business with this group as well. The only thing I could find was the LLC filing in July 2023. If you get any information please share it with us.

@Raye Mayhorn: I teach Subject To and have done them myself for 30 years.

I would not sell using Subject To to a company that created their LLC in 2023. There is too much risk and they don't have the experience. It could easily become a nightmare. In a Subject To, the seller has no recourse. You can’t evict, you can't foreclose and a lot of sellers wind up either trashed credit or in a lawsuit. Neither one of those is fun.

Here's the problem, if the Due on Sale gets called, they have 30 days to pay off the entire balance of your loan or it goes to foreclosure. That shows up on your credit report, not theirs. They suffer no harm, you do. Anybody that created their business in 2023 doesn’t have the knowledge, experience, resources or money to solve a Due on Sale when it arises.

If you must sell creatively, use either a Land Contract/Executory contract of some sort where you keep the right to get your property back if they stop making payments. If they won’t go for that, they are the wrong people to sell to.

I bet these guys are Pace Morbid students and are shot gunning all over the US.. the big red flag is the statement  ( we will return the property in the same condition or good condition) that is just plain not true if the deal turtles up you will get a home that has been a rental and probably needs  a full rehab..  Do NOT sell sub too no reason to do that.. No matter what anyone says its only good for the buyers NOT sellers 97% of the time.. you dont want a mortgage in your name for years and years thats crazy.