Home Selling in 55448>Question Details

n_cc, Home Owner in 55448

If I sell my house to an investor, what happens to the mortgage if the amount paid to me doesn't pay the mortgage in full?

Asked by n_cc, 55448 Sat Aug 20, 2011

So if I owe $180,000 on my current mortgage and the investor pays me $100,000, then I'll put the $100,000 into my mortgage, making it only $87,000 left. So then I'll still have to make payments until it is paid off even though the title is in the investor's name, and the property is no longer mine? Can someone tell me how it works before I look further into this option? Thanks.

Help the community by answering this question:


This is probably a subject to contract with the investor where the home will be put in a trust and YES there are ways to avoid the Due on Sale clause with this action that is not illegal.

The only reason why you as the seller would do this is:
1) the investor will catch you up in payments and so your equity is protected until a further date.
2) The option to repurchase the home after such length of time agreed upon with the investor so basically stay in your home with a rent/buyback option.

this only makes sense to an investor when there is a property with a lot of equity in it. I could probably tell you more if I knew the property but there is equity. You are technically paying the investor and then they are paying down the mortgage.

So that is how the win-win situation is SUPPOSED TO WORK. The investor helps you protect your equity where you would not be able to otherwise in foreclosure and also allow you to stay in the home, and of course the investor keeps a certain % of the equity as profit as part of the deal. If they stop making payments to the mortgage holder which is a possibility they will foreclose on YOU not the investor, but it is not in the investors best interests to do this unless the deal is structured incorrectly or they are just scam artists who try to bleed your equity out and then just leave. This usually happens the most when you as the homeowner are actually not upside down as much as you think you are, and the investor is able to pull out equity and then just leave you high and dry.

There are a couple different ways to approach this, and my best advice is to simply get a 2nd opinion from maybe a Realtor who also works with investors? I fit that bill and would be more than happy to answer your questions, because ultimately it comes down to what is the best strategy for you? The investor is not going to tell you so that is where due diligence comes in.

Attorneys aren't much help in this situation and neither are most realtors as i am reading the comments below. Investors by definition are approaching you to make a profit, and that is why most people will just tell you to do a short sale instead or run, but you CAN'T usually make a profit in a short sale nor stay in your home! If an investor provides this for you then that is where your question becomes a valid one.

At least do a property analysis to figure out your homes value and why the investor is approaching you.

good luck to you!

1 vote Thank Flag Link Sun Aug 21, 2011
BE CAREFUL!!!! You need to evaluate all of your options. Realtors with a CDPE designation have the necessary tools to help you with this process. I would speak with one before agreeing to anything with this investor. I would be happy to answer any further questions being a CDPE myself. It is our goal to help people out of their distress, even if that means not getting a paycheck.
0 votes Thank Flag Link Thu Feb 7, 2013
Dear Home Owner,
Don't do anything until you speak with an agent as well as a settlement attorney. If you want this house you need to make sure it's worth comparable to others. This would only tell if this is a good deal or not.

Wish you the best of luck !!!
0 votes Thank Flag Link Fri Sep 23, 2011
Hello Home Selling in 55448. Yikes! That doesn't sound like a great solution for you. I would find an experienced realtor to help you look into the options available to you before jumping into this scenerio. Check out http://www.MinnesotaShortSaleTeam.com for different options when "upside down" on a property. There are quite a few available to you besides selling to an investor and still paying almost 50% of the mortgage. Short sale, deed in lieu, loan modification, maybe even renting the property would be a better option for your financially. Look for someone educated in distressed sales, such as a realtor with a CDPE or SFR designation. Best of luck to you!
Web Reference: http://www.JoeAndCindy.com
0 votes Thank Flag Link Tue Aug 30, 2011

Depending on your situation you would be better off working a shortsale on your property and allowing us to get a satisfaction from your bank of all debt! What this means is if the bank accepts 100k on your 180k note and gives us a letter of full satisfaction then you owe nothing else. If you dont get this letter of satisfaction then the bank can come after you for a deficiecy judgement. The bank will also try and just give you a lien release on the property which means they will release the lien on the house but will come after you for the remainder of the balance. So be careful most investors will not pursue this type of satisfaction! They do not care about you, They want your property and thats it! It sounds like they are trying to take advantage of you! The best advice I can give you is to contact a realtor, set an appointment and have them explain all of your options. Then choose what best fits your situation. Please feel free to contact me with any further questions.

Thank You and Good Luck,


0 votes Thank Flag Link Sun Aug 21, 2011
Oh and just to clarify 100k offer price is what you have agreed to sell your home to the investor for, but they are not going to PAY DOWN your mortgage with that 100k they are just going to get your payments current. Considering that zip code is my primary area for real estate it is a ridiculously low number. That is mainly how they are creating the large spread for themselves on equity.
0 votes Thank Flag Link Sun Aug 21, 2011
n-cc thats an easy one you would have to pay the 87,000.00 at close to be able to transfer the deed. Check your mortgage or note but there is always a due on sale clause that says that you will pay off the mortgage when you sell the home.
0 votes Thank Flag Link Sun Aug 21, 2011
You can do a short sale. Please visit our website to learn more about short sales - http://www.shortsaledepartment.com. We will negotiate with your lender to take less than they are owed. Feel free to give me a call. I can explain the process.

Eli Givoni, Director
Short Sale Department, LLC
Serving all 50 states

MARS Disclosure for General Commercial Communications
Short Sale Department, LLC is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit.
0 votes Thank Flag Link Sat Aug 20, 2011
It sounds like someone is trying to take advantage of your situation. You probably cannot do this transaction as most mortgages have a Due On Sale clause which states that if a sale takes place you must pay off the mortgage at that time.

The first thing you should do is to educate yourself at to how much your home will sell for on today's market and if a short sale might be a better option for you.
0 votes Thank Flag Link Sat Aug 20, 2011
One other thought on my info below. You may just want to ask a realtor what your home is worth in today's market. You may not have to short sale at all depending on your financial situation. You may be able to take out a personal loan if you don' t have the cash for a much smaller amount than $87,000. If an investor is offering you $100,000 he is doing so because he feels he can make a profit on your home with that offer. Houses are selling in Coon Rapids with good advice and the right pricing. My last 4 listings sold in 2 months or less.
0 votes Thank Flag Link Sat Aug 20, 2011
Hmmmm, I think you are saying an investor approached you and offered you $100,000 to quit claim your home to them. I'm assuming they are offering you cash at closing. They can then turn around and rent it and/or sell it and keep any profits from the rental or sale themselves. You are no longer on the deed, but owe on the note since that does not go away without bankruptcy. This would mean that you have signed away your home and the rights to it but you still owe payment in full on the note. If you pay the mortgage company $100,000, your payments will not change and you will not be able to refinance since there is no longer collateral against the note. If this is what you are saying, don't walk, but run from that deal. There are traditional short sales out there. I do them and have access to attornies to assist with them. Not saying that is best for you, but may be worth checking out vs the above. In either case, talk to a good real estate attorney before proceeding with anything.
0 votes Thank Flag Link Sat Aug 20, 2011
Unfortunately, short-sales aren't always the best answer. Short-selling will damage your credit and the majority of short sales end up in foreclosure because of bad BPO's or appraisals and uncooperative lenders. I would highly recommend you look at avenues outside the short-sale option. Once you hand this process over to your lender, which is what you do in a short-sale, you lose control. As of now, you're in control.

As an active investor, I can almost assure you that the investor/buyer you're talking with now will NOT want to consider buying your home if you move forward with a short-sale. I don't even bid on those anymore because there are simply too many motivated sellers out there and dealing with uncooperative, arrogant note holders is not on my list of fun things to do. IF done properly and legally, selling to an investor may indeed be the best route to keeping you creditworthy and able to move on.

If an investor is willing to give you $100K cash, you have to ask yourself what the chances are that he/she will stop paying you or the underlying lender. My guess is that it will be pretty small, but as long as your transfer paperwork is properly drafted you can keep a right to foreclose on the investor should he/she not keep up his/her end of the bargain. In fact, you would almost hope you could foreclose on the investor for non-payment because he/she will have already paid the majority of your note in advance and once you get the house back you would then be able to sell to a third party who was able to get an institutional loan.
Web Reference: http://www.phgbrokers.com
0 votes Thank Flag Link Sat Aug 20, 2011
A very important factor is that Minnesota is a NON-RECOURSE State:
What that means is that if you lose your house through a Shortsale or a Foreclosure, you will not owe your Lender for the difference. Minnesota protects you.

If you choose to go through with a Short Sale, (to that Investor, for example);
* you will not hurt your credit score as badly
* you will temporarily halt the Foreclosure
* you will have some time until you move

There are other possibilities; please contact a Realtor for more information.

Good luck and may God bless
0 votes Thank Flag Link Sat Aug 20, 2011
Careful.... I would not advise selling your home to an investor without the approval of your mortgage lender. And yes, you would owe the $87,000 to your lender even though the property is not in your name.

There are unscrupulous people out there who will try to talk unsuspecting sellers to do just that. But it is easy enough to do a short sale instead, if you can no longer pay your mortgage.

First you must list the property with a Realtor - preferable one who is experienced in your area. He/she will explain all the steps of a short sale and gather all the paperwork the bank requires. Once you find a buyer/investor for the property, your Realtor will present the contract and supporting documentation to your lender. Your lender will decide whether or not to excuse you from the debt, based on all of your documentation.

I would tell the investor who offered to pay you $100,000 to make the offer to your Realtor after it is listed for sale, as required by the bank.
0 votes Thank Flag Link Sat Aug 20, 2011
As stated, you will need to continue making payments until the lien is paid in full or until the investor sells the property to a third party who has obtained a new loan (assuming the home appraises for the purchase price). And you're correct, the title will be in the investors name while the underlying loan will be in your name. I presume you're considering a straight "subject to" sale to the investor and not a wrap or assumption....is that correct?
Web Reference: http://www.phgbrokers.com
0 votes Thank Flag Link Sat Aug 20, 2011
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