Wrapping / subject-to USDA loan

[Jean G.]

Hello,

we have the opportunity to buy a relatively new home that would make a great rental through a subject-to transaction / wrap. The underlying note is a USDA loan at 3% interested.

The interesting part is that there is about $60k of equity in the home after paying the entry fee.

One of my title companies is refusing to insure the transaction due to the underlying lender being USDA, and telling me that it is a bad idea to do this on a USDA loan. I'm sure I can find a different title company that will insure if needed.

I am looking for feedback from people that buy a lot of subject-to properties. What do you do when the underlying lender is USDA? What is your ratio and timeframe, for the loan to be called? Do they always and all get called? Or do they only sometimes get called?

In our situation, if the loan gets called it doesn't seem like it would be a huge problem, as we could just pay it off and the list the property and get the equity (probably $30k to $40k after selling expenses, assuming the market hasn't dropped).

Thank you in advance for any feedback anyone is able to provide on the subject of a subject-to sale with a USDA loan.

Jean