FAQ

What is Subject-To?

A “subject-to” transaction refers to purchasing a property while keeping the existing mortgage intact, with the buyer assuming responsibility for the existing mortgage. The term “subject-to” is mentioned on HUD statement lines 203 and 503, signifying that the buyer is acquiring the property subject to the existing mortgage terms. Despite its long history, some sellers, investors and brokers may not be familiar with the subject-to strategy and may raise concerns about its legality. However, the IRS recognizes and acknowledges the subject-to strategy.

The term “subject-to” is even listed on the HUD statement, and the IRS provides information on the subject in Publication 537, which can be found at this link: Hud Example

How am I protected?

The seller is protected by a pre-filled document called a Performance Deed, recorded and enforced by the closing Title Company. A Performance Deed is a legal document that allows a borrower to transfer the ownership of their property back to the original owner while avoiding lengthy foreclosure and lawyer fees. This document is completed and recording at closing by the Title Company.

Do you make payments to me, then I pay the mortgage?

No need! We want this to be as painless as possible. We will either be added as a 3rd party on the loan and add our payment information (set up with auto-pay), or we can use a loan servicing company to service our agreement.
A loan servicing company is a third-party entity that manages loan-related tasks such as collecting payments, sending statements, and ensuring that the borrower stays up to date on their payments.

What happens if you stop paying?

In the highly unlikely event that we are abducted by aliens and unable to make payments, the property would be transferred back to the seller through the Performance Deed mentioned above. This means that the seller would keep all the funds we’ve paid so far and regain possession of the house.

How do I submit information to take next steps ?

In order to present you with a tailored offer, We will need some specific information about their situation. While some of the questions might seem a bit personal, they’re essential for us to dive deep into the details and create an offer that’s a perfect fit. Here are the key pieces of information we need to send the perfect offer:

Full Address
Loan Amount Remaining
Interest rate
Monthly Payment
Year loan was established
Major repairs needed on property

Please send us a message here.

What happens after I send property information?

We’ll take a look at the information that you provided and may contact you by phone to get additional details about your situation and the property that you want to sell. After considering all of the specifics of your home, we’ll provide you with a fair and honest offer on your property that’s a win-win-win for you and us. Once you have an offer from us, there’s no obligation whatsoever for you to accept it. If you do decide to sell your home to us, the process will go fast and you will get to pick a closing date that fits your schedule!

What about my Debt-To-Income (DTI) when I am ready for a new loan?

When a borrower is obligated on a mortgage debt – but is not the party who is actually repaying the debt – the lender may exclude the full monthly housing expense (PITIA) from the borrower’s recurring monthly obligations if:

– The party making the payments is obligated on the mortgage debt
– There are no delinquencies in the most recent 12 months, and
– The borrower is not using rental income from the applicable property to qualify.

In order to exclude non-mortgage or mortgage debts from the borrower’s DTI ratio, the lender must obtain the most recent 12 months’ cancelled checks (or bank statements) from the other party making the payments that document a 12-month payment history with no delinquent payments.

Review full mortgage DTI details here:
Fannie Mae DTI Assessment