Assignment of Contract (Weird Situation)

[Cory A Hall]

Hello everyone!

So I've been wholesaling for about 6 months now, but I've never experienced a deal quite like this. I got the property under contract for $58K, and the seller still owes a mortgage of about $54K. She really just wants to get rid of it, as it was inherited, and she doesn't want a second mortgage payment. There is also a $3,000 lien that was placed against the property from not paying off a credit card, I believe. I found a buyer, but he wants to assume the existing mortgage loan and keep it as a rental property. I guess my question is how would this work? The bank said that the mortgage is assumable. Would I just send the buyer an Assignment of Contract with all the terms that he and I agreed to, and have him pay me a flat fee up-front or maybe when the assumption process is complete? As well, the lien would need to be taken care of beforehand, right? Or would it be possible for the buyer to wrap this into the mortgage balance? I really appreciate any help with this. 

Thanks a lot!

[Lydia R.]

@Cory A Hall There are a few things that dont make sense. If the seller inherited the property the loan is in the name of the person who is deceased right? Or is the loan in her name? Typically investor-buyers dont want to assume a mortgage, they want to take it over subject to the existing loan which is different from assuming the loan. It sounds like you spoke with someone at the bank who said the loan is assumable, but you are going to want to get clarification from your buyer that they want to assume the loan not take it subject to because those are two different things.

From a wholesale perspective, yes you can wholesale a sub2 deal. You still get paid at closing. Also, your numbers seem kind of tight? 58k purchase price 54k mortgage plus 3k in credit card debt? Have you spoken with the title company and gotten all the payoff numbers? Your purchase price needs to at least cover all the existing debt on the property, make sure thats the case with your contract price otherwise you will either need to renegotiate price with the seller or the seller will have to bring money to closing. Hope this helps!