Mortgage Assignment Contract Overview?

[Mike D.]

I have been inquiring about this new method of real estate investing. Is there anyone here on BP who's familiar with doing Mortgage Assignment Contracts? If so what are the pros and cons? I want to start doing this because opportunity seems priceless, if anyone can touch on this subject matter it would be greatly appreciated.

Thanks

[Jon Holdman]

Lorelei says:

What is a Mortgage Assignment?

The sale of a home where the loan(s)/lien(s) are assigned to a buyer in exchange for hte deed (ownership).....

Bryan says:

If a term is not meant to be taken literally, it shouldn't get a precise definition like the one Lorelei quotes. Googling the first part of Lorelei's definition, "The sale of a home where the loan", turns up numerous hits of the exact same text Lorelei quotes. To say its not meant to be take literally is, IMHO, dissembling. Meaning "conceal the truth or real nature of". By saying "mortgage assignment", most people would assume the "mortgage is being assigned to the new buyer". In fact, nothing of the sort is happening. The buyer is buying the house subject to an existing mortgage. The existing mortgage's terms have been violated. The mortgage holder can call the mortgage at any time, and the buyer has zero recourse against the lender.

Lorelei you say "We, as a buyer are assigning the contract to the buyer for the seller" and then turn around quote the definition "sale of a home where the loan(s)/lien(s) are assigned to a buyer". "Assign" in this context means either the contract is being assigned (as you say) or the mortgage is being assigned (as in the definition you quote). If its being used for two different meanings, are you really prepared to stand in front of a judge and try to explain how it means two different things? And that the second meaning (assign the mortgage) isn't really what you mean?

If "investors" do a bunch of this sort of deal, its only a matter of time before some buyer takes it to court on the grounds that they have been deceived. It will only take a few such cases before some judge agrees with the buyer and sends some investor to jail.

Its one thing for a sophisticated buyer who understands the risk to buy a property subject to. They know what they're getting and can be prepared to deal with the fallout if it happens. It is, again IMHO, a totally different thing to sell a house to a unsophisticated buyer, i.e., 'people who are "unloanable"' under these terms. When you wrap such a deal in terms like "mortgage assignment" that, colloquial or not, carries a certain interpretation that must be overridden with "well, it doesn't really mean jack", you are setting yourself up for trouble.

This sort of deal is what gives real estate investors a bad name.

Just my opinion.