Wrap Mortgage

[Ariel Moore]

We are working with a seller in foreclosure. There is quite a bit of equity in the home and it only needs minimal upgrades and repairs. The foreclosure sale date is fast approaching...only a few days left. The sellers want to sell to keep the foreclosure off their records and they want a little cash in their pockets. No problem. We have offered them a small amount so they can move on with their lives. The problem is that the sale date is so soon and the only way the bank will stop proceedings is if they (the bank) receive a PSA, HUD Statement and a copy of the earnest check. Again, no problem - except that we want to buy this house 'Subject To' and we know the bank will not accept this. They will see it in the contract and reject it.

We were planning on paying the arrears, then taking the house Sub-To. The only way I can think to do this is as a Wrap. We are giving the sellers $5K in cash to move which they need in their pockets at close. We are not adding any $$$ to make it a Wrap nor do we really want to pay anymore for the house. My question is can we do a wrap without actually adding a seller financed mortgage to this so it just technically is a wrap but not really. In other words the amount of the original mortgage would be as it is now.

We have planned to use a third party escrow company to make the payments to be sure they get made to the bank. HELP!

[Jason Dillard]

Just take it sub2. Get title company to request amount to catch up and wire instructions. Have closing agent collect money to catch loan up and you start sending payments to lender next month. Change address with bank to yours so you get statement. Get proof of insurance to bank with you as new additional insured. Get a authorization to release from seller to use later with bank. We do it all the time. No need to wrap.