SELL YOUR PROPERTY “SUBJECT TO” YOUR MORTGAGE

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In a “subject to” transaction, a buyer offers to make up your back payments and take over your property, subject to the existing mortgage.  The title of the property goes into the buyer’s name, though the mortgage stays in your name until the loan is paid off. This could take as little as thirty days, or as long as three years.  You may ask, “how do I know the investor will make the payments?” The answer is quite simple: he has just made up all of your back payments and now has a financial stake in the property. It only makes sense that he makes your payments to protect his investment.

Most conventional loans include a “due-on-sale” clause in the original loan paperwork.  This clause allows the bank to demand full payment of the loan if the property is sold or transferred without the lender’s permission.  Initiating actions such as foreclosure or repossession are expensive so accelerating the due-on-sale clause is not in the best interest of the lender.  As long as the bank is receiving monthly payments, the lender should be happy. 

This type of sale is becoming quite common. The benefits to you:

• You don’t have a foreclosure on your record;
• You may get some cash immediately to start fresh;
• You immediately solve your looming foreclosure; and
• Your credit gets built back up through no effort of your own, because the buyer makes up your back payments and begins making your monthly mortgage payments on time every month. Before long, your credit score is once again in good standing.