Subject To and Wraparound Mortgages

[Olena Kureshi]

Hello everyone,

Does anyone successfully invest with Subject To's and Wraparound Mortgages? Can't find legit information as for how to avoid Due-on-sale clause. I've heard about the option of creating Trust with the seller, but my latest research shows that it still will not protect the seller. Please, give me a real advice in which direction should I look? Or should I just let the seller know all the risks and move forward? 

Thanks!

[Account Closed]

Originally posted by @Olena Kureshi:

Hello everyone,

Does anyone successfully invest with Subject To's and Wraparound Mortgages? Can't find legit information as for how to avoid Due-on-sale clause. I've heard about the option of creating Trust with the seller, but my latest research shows that it still will not protect the seller. Please, give me a real advice in which direction should I look? Or should I just let the seller know all the risks and move forward? 

Thanks!

I only do Subject To, Wraps, Land Contracts, Owner Financing & Lease Options. The seller still has a risk of the DOS with those, except with a Lease Option. However, a Land Contract (or sometimes called Contract for Deed) is probably the best protection for the seller, although not absolute. The DOS says the bank "May" call the loan, it doesn't say the bank "Has To" or "Will" call the loan. Subject To has the least protection for the seller. With any of those techniques, definitely disclose to the seller the risks and how you will deal with the risks. Use an attorney to close and make sure you have a title report. Some people use Land Trusts but I don't like them. It makes it look like you are trying to hide something. Also, some day when banks start calling loans, it's easier to do a search on "Trust" and find the files that have that designation. If you structure things properly, that is of little concern. Disclose everything to the seller, in writing, which they sign and give them a copy.