Seller has active Ch 13 Bankruptcy - Can I acquire Sub2?

[Dara Abasute]

SITUATION: Seller has an active bankruptcy and wants to sell b/c she's relocating. She would negotiate a short sale with lender if necessary, and I'm wondering if subject to is a viable way to acquire this deal or if it even is a [doable, good] deal at all. The trustee she's working with is aware she wants to sell her home. Seller is willing to "discharge" her bankruptcy to get a creative deal done if possible.

DETAILS: 

• - Seller filed ch 13 in 2019. 
• - Mtg payoff amt $137K
• - PITI $917/mo
• - Lender states borrower is 14 payments behind ($917 * 14 = $12.8K)
• - ARV $207K
• - Repairs: none
• - Avg. Rent: $1300/mo
• - Seller wants $5K to help with her move

QUESTIONS: How would one structure a subject to in this situation? Will catching up the back payments (and seller paying off legal and trustee fees) to discharge the bankruptcy suffice in making sub2 work? Is a short sale the better route (I've never done one before)?

[Mitch Messer]

Hi @Dara Abasute! Congratulations on connecting with a seller who seems to really need some help!

First, let's talk short-sale: Not gonna happen! There's ZERO incentive for the lender to accept anything less than the full loan amount in this case. They'll foreclose long before they'll accept a short-sale.

Regarding sub-to, I would urge you not to attempt one without basic training and also excellent paperwork. The penalty for getting these deals wrong can be severe and career-ending!

Regarding the seller's request for $5K, just keep in mind that they have been living in this house for over a year and paying nothing toward the mortgage. And now they need money to move? Perhaps this deal could be done with a more reasonable amount paid to the seller. Just sayin'.