Subject to on rehab loan?

[Hasan Hamdan]

Has anyone had experience buying a property Subject to with an FHA rehab loan? The seller bought it as an REO, renovated and then fell behind on payments. We've never done sub to investing but this could potentially be a great rental property. This is a 3 fam in North Bergen, New Jersey.

[Hattie Dizmond]

@Hasan Hamdan 

As long as the property owner, who is the obligor on the rehab loan, has fulfilled any special requirements (i.e. occupancy and any other non-monetary requirements, or any special requirements regarding directives attached to funds and how those were to be used...not repayment requirements) the loan is no different than any other insured mortgage.  Therefore, if any special riders have been fulfilled, you can purchase the property Subject 2 the existing financing.  Make sure you and the seller are aware and you have fully disclosed that the lender CAN call the note due based upon the sale of the property.  If you bring the note current and service the loan satisfactorily, it is unlikely they will, but they can.