Mj, Home Buyer in Concord, CA

True or False? You can take over mortgage payments for someone in pre-foreclosure wihtout having to qualify.

Asked by Mj, Concord, CA Fri Aug 29, 2008

Can you take over someone mortgage payments without having to qualify yourself with their lender.

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20
Randy Stevens, , Austin, TX
Tue Sep 29, 2009
I see that this question is old but just for the sake of impressing myself I will answer this question. It is absolutely true that you can do this. Without reading too far in between the lines of the question, yes, you can take over payments without having to qualify. Depending on your state laws there are different ways to go about trying to gain title to the property and getting the lender's graces but it is absolutely possible to do this. In Texas, my investment group has been doing this for the last 6 years and have not yet had a single bank call the note due. We are deeded title to the property in the process, all closings and documents are prepared by attorneys and title companies and we DID NOT have to qualify for the loan.
5 votes
My company has been doing this for many, many years. There is very little cost to doing this, just make sure that a title check is run to make sure that you have good and equitable title.

@Steve: What kind of equity do you think is involved in this property? If you go through a Realtor (nothing against them at all, they're just not needed in this type of transaction) you will have little or nothing in the way of equity.

@Syed: I can help you to do this. Let me know.

My email is jeff@webuync.com
Flag Mon Jun 6, 2016
I AM THE SELLER - WHERE THE BUYER WANTS TO PAY MY EXISTING MORTGAGE 23 MORE YEARS ON A 30 YEAR. AND GIVE MY EQUITY IN CASH. WHAT ARE THE NEXT STPS ONCE THE EQUITY NUMBER IS AGREED UPON? WE DO NOT YET HAVE A REALTOR UNDER CONTRACT.
Flag Sun May 8, 2016
Randy what is the cost involved in such a transaction and how does one go about executing it? My son has a property he no longer wants and I am prepared to take it over. I have good credit history and capacity to pay.
Flag Thu May 5, 2016
I am very interested. How would one go about locating pre-foreclosure homes and getting this process going?
Flag Fri Jan 2, 2015
State law has nothing to do with this subject.
Flag Wed Apr 16, 2014
yes I can take over a house payment if the payment is within price range sure that would be great!!
Flag Thu Jan 30, 2014
What about the original owners, don't you have to get them off the deed. Do they get any money?
Flag Fri Oct 5, 2012
Catherine My…, Agent, Walnut Creek, CA
Fri Aug 29, 2008
Well you can pay anyone's mortgage payment of course, but that does not make you the owner or relieve the borrower (the sellers) obligation to the lender. You can even take over their payment and switch the deed, but that may trigger the due on sale clause which may call the loan due in full. Now there are equity share ideas that work by paying by essentially paying the sellers mortgage payment - and well, that's an interesting option I've helped a few clients with but needs an attorney involved.

So all in all, not a slam dunk take over payments and you own the house. Plus if you are an investor, and there is a notice of default filed on the property, be really careful when dealing with owner occupied homes. A lot of pitfalls many don't even know about.

There are ways though if you can't afford the down, or can't quite quality that in some cases an "equity share" arrangement that can work but needs a very carefully crafted agreement - by an attorney.
2 votes
Jerry Flynn, Agent, Clayton, CA
Fri Aug 29, 2008
Mj,

Back in the good old days, you could do that, but not in current times. You can probably assume someone loan, but you have to qualify.

Jerry Flynn
Old West Realty Inc.
Danville, Ca.
2 votes
it all comes to the refinance fees. Back in the day you could flat out assume someone elses loan. Today, anytime a property is going to transfer names, the lenders are going to get their refinance fee.
Flag Sat Jan 25, 2014
RonS, , Concord, CA
Tue Feb 18, 2014
Yes and no. Yes, you can go ahead and make payments to a lender for a loan in preforeclosure and you can do it without qualifying but you will not accomplish what it is you are trying to accomplish. First) unless it is the entire amount that is past due, the lender won't accept "Payments". Second) so what? You are making payments. That doesn't mean you own the home. You want to get on title to make it "Legit"? That means nothing for the purposes of this discussion. You can't talk to the lender, you can't negotiate to the lender, you can't really do anything with the lender other than to mail some payments in that may or may not get rejected because, you are not a party to the transaction with the lender.

VA loans are assumable without qualifying. The Vet loses their ability to use their VA loan again until that assumed loan is paid off.

Other than the urban legend that you can do it, for the most part, you can't. You can make payments and take title but it's at the risk of foreclosure from the servicer of the loan for the breach of contract. You do it subject to default by the lender.

Rent a home or save up to buy one. There aren't any shortcuts and all of the "investors" telling you they do this every day, just haven't had one taken from them yet. Key word being yet.
1 vote
caibuyhouse…, Other Pro, Concord, CA
Sat Aug 10, 2013
TRUE!!! You do not need to assume the loan nor do you need the lenders approval. The bank does not own the property.The loan will remain in the sellers name. If you don't make the payments, the property will revert back to seller. The seller is fully responsible for the loan. You should set up a third party system to ensure the bank receives the payment. However, if the lender has a "due on sale" clause (which states the bank can call the loan due in full if ownership transfers) they could force the seller to pay the full balance of the loan. VERY UNLIKELY!! The bank does reserve that right, but they rarely ever exercise it. If they are getting paid, they don't care!!!. Banks are in the business of making money. If they foreclose, they loose. If they shortsale, they loose. Now if you stop making payments, and the seller can not keep it current, then the bank might use this clause to speed up the foreclosure process. MAKE YOUR PAYMENTS! So it can be done easily but always do your due diligence. Be responsible. As a real estate investor, I have acquired many properties this way, and I will continue to do so. Good luck!
1 vote
As RE investors, We recently assumed a mortgage and have tenants in the property now. We are concerned about the insurance. The insurance is still in the name of the seller and is being paid from esrow. Can we switch insurance companies and put the insurance in our name, or will that provoke the due-on-sale clause? If the current insurance is needed, will it be void, or paid to the seller instead of us? Not sure how that all works.
Flag Thu Dec 29, 2016
If the bank exercises the due on sale clause (highly unlikely) then you must get a loan along with a sales contract from the original owner ( actually owner of the loan) and close. Other option is just let the house foreclose and walk away. The original owner will not be too pleased with you though and your reputation as an investor will suffer.

If you're paranoid about the due on sale clause, you can create a trust and transfer the property to the trust. Now the trust owns the home but you are the beneficiary of that trust. Just send a letter to the bank notifying them that for estate planning purposes you have transferred ownership of the home. Keep in mind though, that the original owner OWNS THE LOAN while you own the home.

David Garcia
Flag Fri May 20, 2016
What will happen if the bank does activate the due on sale clause? What are my options as an investor?
Flag Thu Nov 20, 2014
What will happen if the bank does activate the due on sale clause? What are my options as an investor?
Flag Thu Nov 20, 2014
What will happen if the bank does activate the due on sale clause? What are my options as an investor?
Flag Thu Nov 20, 2014
There are no ways to "Speed up a foreclosure" with any fantastical clause.
Flag Tue Feb 18, 2014
Can you email me? I need some more info. kaseydubb@gmail.com
Flag Mon Sep 23, 2013
Diane Wheatl…, Agent, Upland, CA
Mon Oct 13, 2008
Sure you can with permission of the seller and the lender. But you won't have any ownership interest in the property with the exception of a tenancy relationship. The seller is on the hook if you don’t make the payment on time and possibly create further credit issues for him. Lenders do not like to see this type of arrangement because they know nothing about your credibility and could cause the seller more stress by threatening to call the loan, etc.

If the loan is adjustable it is most likely assumable but it must be taken over through a formal assumption meaning that you will need to qualify to take over payments through the recordation of a new trust deed and grant deed showing your name as the new owner of record.

The only way I know of that you could hold an ownership interest in a property without qualifying for a formal assumption is when the property goes to foreclosure on a second or third trust deed that defaulted. You attend the trustee's sale and bid an amount to satisfy the second trust deed. When a second trust deed is purchased through a trustee's sale it will be "subject to" the first trust deed. Meaning that you will now be responsible for the first trust deed and its terms and conditions just as if you were the original borrower. No qualifying needed. And you are the new owner of record too.

There is so much information available regarding foreclosure sales and what they entail, what to look out for and how best to understand the whole process. Consulting a real estate attorney regarding these issues is always your best bet so that you are ensured of the most accurate information available in your state.

I hope I helped a little instead of confusing you even more. Good luck in your house hunting and all that entails.

Diane Wheatley, Broker
(909) 981-5589
1 vote
Wrong, do your homework. My investment group has full ownership of the all the properties we have taken over "subject to."
Flag Thu Aug 29, 2013
Vicki Gay, Agent, Roseville, CA
Fri Aug 29, 2008
I don't believe so. A long time ago lenders used to allow mortgages to be assumed without qulifying but not any longer. It's not very safe for any of the parties involved. First of all, the seller is still tied to the mortgage and if the buyer defaults on the payments it could ruin his credit not the buyers. Secondly, the buyer needs to have the property deeded to him, why would a seller turn over the deed to their property while remaining financially responsible for it. And third, lenders want to make sure that you qualify for their loan especially given the current mortgage problems were seeing. There are lot of scams out there so be careful!
Web Reference:  http://vickigay.com
1 vote
what if we are not behind we make our payments we just cannot sell the home but are willing to turn over the home to someone else who will just take over payments so it will be theres. can we do it and how?
Flag Thu Feb 18, 2016
Lawpitt, Home Buyer, New York, NY
Wed Aug 10, 2016
How can I take over someone mortgage payment
0 votes
Maurice_pete…, Home Buyer, Concord, CA
Sun Apr 3, 2016
How can I get a mortgage with bad credit
0 votes
Ted, Home Buyer, Concord, CA
Thu Oct 22, 2015
The only person who can answer this question is the bank. Tell them what you are doing and ask if are willing to allow you to catch up the mortgage and make future payments.
0 votes
RonS, , Concord, CA
Wed Apr 16, 2014
False Randy Stevens (You aren't Randy Steven's from Saxon are you?):

...and state law has nothing to do with this. It's lender guidelines that dictate what is allowed.

While there are a few unique loan types that are assumable (VA for one), 99% of loans out there have specific language in the terms of the note and deed of trust that prohibit transfering ownership without the express written authorization of the lender. That could trigger a default and possibly cause the lender to initiate foreclosure proceedings. "Could" and "Possibly" are the key words here that need to be taken into consideration. We as lenders could accelerate the note. Will we? Well, you could do what you thinking about doing and see what the lender says. I personally wouldn't try to work around the system or the lender. If you are serious about doing it, work with the lender, not behind their back and see if they have any programs that would allow you to do so.
0 votes
Don Maclary, Agent, Virginia Beach, VA
Mon Feb 3, 2014
In the 80s many loans were assumable and you could buy another persons mortgage for 5-20K with ease. Those loans have not been written for years and those that still may exist would have extremely small balances. In essence you would be paying cash if you found one.
0 votes
Maryann Salt, Agent, Walnut Creek, CA
Sun Feb 2, 2014
Yes you can assume the mortgage if it's an FHA loan and there is an assumption clause in the note. When you assume the loan, you don't have to qualify. Any other type of loan will require you to qualify. If you takeover the loan the lender can foreclose on the home.
0 votes
WoW! that is great news now only if I can get someone to help me find a home that I would be able to take over the notes in west little rock like Peacan lake or Westernhills area also a nice quite area in Twin lakes 3br 1 1/2 bath.
Flag Wed Feb 5, 2014
angela Pitts, Home Owner, Little Rock, AR
Thu Jan 30, 2014
Yes I could take over someone's mortage payments without having to qualify myself with a lender only if the price is right. I think it would be a great idea as long as the owner doesn't change their mind which would cause me to be out in the streets or a tiny little apartment I look at it in a way of helping each other I would help keep their credit good while I would have a nice roof over my head.
0 votes
You'd want to some how find out if the owner has an FHA loan with an assumable clause. You can probably find this through public records or a local title company. I would think it would be difficult to find because not alot of homeowners has these types of assumptions clauses. The most common assumption clause is that you'd have to qualify to take over the loan, which would mean the existing lender would have to look at your income and credit and employment. Good luck.
Flag Fri Feb 7, 2014
Beta, Home Buyer, Daytona Beach, FL
Sun Oct 6, 2013
I was wondering that too,
0 votes
Aneika Brown, Renter, Chicago, IL
Thu May 9, 2013
False it is a scam to me I will love to do just that but it is more behind that
0 votes
I know there are scamer out there but also it's good people to which at this time and date a lot of people just can't make these payments and want to keep their credit good so I believe it's true you just have to do your homework first to make sure everything is in order.
Flag Wed Feb 5, 2014
Vhmh@ssrgg.n…, , Home Place, LA
Tue Aug 23, 2011
Because as long as the property is being maintained and the mortgage payments paid there are no losers only winners. The debtor is losing the property anyway and the bank does not want the property so long as the payments are paid and maintained.. This is a time when people who have money but poor credit can make a good deal.
0 votes
Ken, Both Buyer And Seller, Flower Mound, TX
Wed Feb 17, 2010
Yes, you can assume a non assumable mortgage. Assume you own the home and are transfering ownership. You are breaching your contract with the lender to do so. This is a breach of contract, but not illegal. The lender HAS THE OPTION, BUT NOT THE OBLIGATION TO CALL THE NOTE. The buyer takes title, makes back payments and records the title. Your name remains on the loan. If the buyer defaults, the lender can foreclose on you since the mortgage is still in your name. People don't realize it but the lender can accelerate a note for other reasons, including signing a lease on the property for more than 3 years or neglecting to protect the home.

This is often done with divorces, with inter family transfers, with transfers to heirs prior to death and of course to avoid foreclosure.

If you are still interested, I recommend you continue the learning process with a title attorney and not a Realtor.

Ken
0 votes
There's something called a release of liability...
Flag Fri Jun 19, 2015
Beau Eckstein, Agent, Walnut Creek, CA
Mon Oct 13, 2008
Loans today are typically not assumable, however many investors will bring a mortgage current and take over payments while deeding themselves onto title. If you read the loan docs they typically have a loan acceleration clause in them. The good news is I don’t think the banks want to take anymore homes back. Just be careful when structuring deals like this. You can give me a call and I can give you a better option.

Cheers!

Beau Eckstein
beaueckstein@gmail.com
0 votes
Bernard Gibb…, Agent, Danville, CA
Fri Aug 29, 2008
Wouldn't that be a great idea? I don't know where that one originated but I wouldn't give it too much credence.

Just think about it. If your home is in pre-foreclosure and you know somebody with poor credit, no money and a small income who "thinks" they can afford the mortgage, how would it make any sense for a lender to accept them in place of you?

Bernard Gibbons

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Bernard Gibbons, Realtor, e-PRO Certified Internet Specialist
J. Rockcliff Realtors, 15 Railroad Avenue, Danville, CA 94526
Phone (925) 997-1585
bernard@bernardgibbons.com
0 votes
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