Financing in Lynn>Question Details

Glenn Boyce, Both Buyer and Seller in Lynn, MA

Are there any FHA loan backed owners who just want to stop paying for it anymore, if so me & my fiance would love to assume all responsability.?

Asked by Glenn Boyce, Lynn, MA Mon Sep 27, 2010

I totally understand that NO loans are "legally" assumable perse anymore, but am also well aware that they(FHA) would most likely not call in the due on sale clause if the mortgage payments were made.

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Scott Godzyk’s answer
There are assumable fha loans, the newer ones will require you to be quailified to assume them while the older ones are non quailifying loans, you could just step in if teh seller give sthere ok, th ekey for teh seller is if they are relased from liability or not.
0 votes Thank Flag Link Mon Sep 27, 2010
Your observation is correct on loans that are not assumable. The technique--which some investors use--is called "subject to." That is, you acquire the home "subject to" the existing financing. The mortgage(s) stays in the name of the original owner. The deed is transferred to you. At some point, you'd refinance the property, thus taking the mortgage out of the seller's name and getting a mortgage in your own name.

The process is quite safe for you, but risky for the seller. If you default on payments, the lender will come after the seller--not you--since the mortgage remains in the seller's name. However, as you noted, a "subject to" transaction would allow a lender to trigger the "due on sale clause." As a practical matter, in today's economic environment, that's pretty unlikely.

Hope that helps.
0 votes Thank Flag Link Mon Sep 27, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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FHA loans are assumable. Why would someone want to take a chance on a note being called?
0 votes Thank Flag Link Mon Sep 27, 2010
FHA loans are assumable. Why would someone want to take a chance on a not being called?
0 votes Thank Flag Link Mon Sep 27, 2010
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