A legal question.

[Ken DiPietro]

To the experts here,

Perhaps asking for legal advice is inappropriate in this forum but if I could get an off-the-record opinion I would be deeply appreciative.

The scenario is this, if I were to locate a property owner who is in the process of being foreclosed on, offer pay off their overdue payments, take over their loan payments, and hand them some money to move with, am I opening myself up for any risk?

This arrangement would be made through an attorney and the title for the home would be held by the lawyer until such time as the loan was paid off when it would be deeded over to me.

The intent is to save the closing costs associated with a loan and hopefully pick up a loan where the bulk of my payment would be going towards the principal. This also means that this deal would be done privately without the lender's knowledge.

Thanks,

Ken

[Ryan Webber]

As Justin referred to, with a Subject To deal the biggest risk is the Due On Sale Clause. If title is transferred the DOS Clause allows the bank to accelerate the note and foreclose on the property.

As Justin referenced the biggest risk comes when you change the insurance over. One way to mitigate that is to add your name to the insurance without taking the original owner's name off. You would be responsible for paying it, but then the original owners name would still be on the policy. You would have to get the original owner to sign off on any insurance proceeds but it won't alert the bank to the title transfer.

I would also echo Justin here that you must get the property deeded to you at the onset of the deal. The risk without having a recorded deed is just not worth it.