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In its simplest form, the “subject to” in a subject to mortgage refers to the loan that’s already in place. When you purchase a property subject to, you are essentially buying the home subject to the existing mortgage — that’s really all there is to it. The original underwriting is kept as is, including the name in which the loan was purchased.

Compared to a traditional house sale, a new concept being pushed is a subject to loan assumption. It sounds good on paper, but ive never heard of them before

>In its simplest form, the “subject to” in a subject to mortgage refers to the loan that’s already in place. When you purchase a property subject to, you are essentially buying the home subject to the existing mortgage — that’s really all there is to it. The original underwriting is kept as is, including the name in which the loan was purchased. Compared to a traditional house sale, a new concept being pushed is a subject to loan assumption. It sounds good on paper, but ive never heard of them before

(post is archived)

[–] • 1 pt

You've never heard of them before because they weren't worth the risk. If the lender sees that the deed has been swapped out under them, they may call the loan due. Mortgages are almost always explicitly 'non assumable'

Now that interest rates are relatively high, people are willing to take the risk

[–] [deleted] • 0 pt

I noticed the people selling these things are incredibly obtuse about what the process entails and how it can screw you over later. If they take the asset, and you get stuck paying off the loan, you're out of the house AND the loan amount which would be devastating for most people

[–] • 1 pt

It's not used much because it's a stupid risky way to buy property - you're relying on the original mortgagee to continue with the mortgage in good faith because they still own it. The original mortgagee is also relying on the new buyer to act in good faith and make payments, but if they don't then the original winds up holding the bag.

If the original decides to sell to someone else, declare bankruptcy, etc. then the subject-to buyer is out. If the subject-to buyer defaults, the original is out.

[–] [deleted] • 1 pt

Plus the companies who pull this crap are absolute grade-A assholes, they essentially take over the ownership of the house before documents are ever approved, which im pretty sure is beyond illegal

[–] • 0 pt

It's probably in one of those legal gray areas where it's not really regulated per se but it could maybe fall under either this or that so it doesn't really fall anywhere that's concrete.

[–] [deleted] • 1 pt

Pretty much, in this case some a-hole company put a memorandum on my house and is now demanding 50,000 to take it off ... piece of crap scammers is what they are