Dont buy subject to the mortgage

Don't do it!...The Florida legislature made it illegal to take over a persons mortgage it they are in foreclosure. In section 501.1377 you could find yourself in big trouble- if you are caught. Specifically, the legislature created a law that states the following: “ In any foreclosure/rescue transaction before or at the time of conveyance, the equity purchaser must fully assume or discharge any lien in foreclosure as well as any prior liens that will not be extinguished by the foreclosure.” For those one trick Florida investors who buy foreclosure properties, please beware of this situation. Believe me, someone will be made an example of.

 

Alright, here lies the problem. Now, how do we solve it? If your dealing with sellers that have a lis pendens filed against them to instigate a mortgage foreclosure, don't convey title to the property unless you are going to assume the loan or pay it off. Now, for many investors that could limit how many houses they actually purchase due to the lack of credit or funds. The way to solve this potential problem would be to do a lease/option on the property. You could give them some money upfront and pay their mortgage until such time as you find a buyer that can obtain new financing to pay off their existing debt.

The market has changed, the laws have changed, and for those investors who don't change their business practices, there is trouble ahead.