How To Work Effectively With Mortgage Companies In Subject-to Transactions
We have addressed in past articles that, in general
, mortgage companies are not averse to subject-to transactions, but that generally it pays to not bring them aggressively to their attention. However, you are going to need some information from the mortgage companies that only the lender can provide, and you may have questions about the loan that the current borrower cannot answer or cannot be relied upon to answer wholly or truthfully. When this happens, you must have access to the mortgage company and be able to ask them questions directly as well as set up where payments will come from and other practical measures.The best way that we have found to resolve this issue is to get a limited power-of-attorney (POF) from the seller that enables you to make decisions on the sellers behalf about the mortgage. This POF can be initially structured to last a few weeks while you do due diligence, but if you complete the subject-to transaction then the POF must be permanent or you may find yourself unable to sell the property because you cannot change the payment arrangements, at the very least.
POFs are not uncommon, and generally as long as all your paperwork is in order, a lender will be more than happy to speak with you about the loan once you have been granted the POF. In many cases, you can resolve initial concerns and answer your early questions just by getting on the phone with a representative from the lender and the current owner of the property and providing verbal confirmation that you are cleared to ask these questions and be given answers. Of course, you must make sure that the current homeowner is also very clear on what they should and should not say about your future dealings. Be careful not to say anything about your purchase of the property. Simply leave things as they stand: that you now will be handling the loan and payments on the property. In this way, you can make sure that payments are made on time, arrange automatic withdrawals and check to be sure that property taxes and other items in escrow are being met and paid for appropriately.
Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate investing. For more information please visit www.CoachingByPeter.com
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