avoidforeclosure.co

Taking over your payments

This is sometimes called buying "subject to" the existing loan. It can work when there's little or no equity, but it carries real risks for you, and you should know every one.

Who holds the house and the loan when I take over your payments
  • The house, today (you hold it): Yours
  • The house, at closing (I hold it): Deeded to me
  • The house, later (I hold it): Mine
  • The loan, today (you hold it): In your name, and behind
  • The loan, at closing (you hold it): I bring it current. It stays in your name.
  • The loan, later (you hold it): Still in your name until it's paid off or refinanced. I make the payments.

How it works

  1. You tell me about the house, the loan and how far behind you are.
  2. I look at the numbers and, if it works, make you a written offer. It spells out the price, who pays what, and when.
  3. I pay the missed payments to bring your loan current, at or before closing. That's called reinstating the loan. Full reinstatement means paying everything you're behind, including fees and costs, in one lump sum.
  4. At closing, you deed the house to me. The existing mortgage stays in place. I make the monthly payments from closing on.
  5. The loan stays in your name until it's paid off or refinanced.

Who it fits

  • You owe close to what the house is worth, so a cash offer can't cover the loan.
  • Your loan has a payment I can carry, and you're ready to move.
  • You understand that the loan stays in your name for a while, and you're comfortable with how we'll handle that in writing.

What stays in your name, and for how long

The mortgage does. The house is mine after closing, but the loan you signed stays in your name until it's paid off or refinanced. That can take years.

The risks to you

  • The loan stays in your name. If a payment is missed, it's your loan that's late.
  • Not making mortgage payments can hurt your credit score and limit your options. Negative payment information can stay on your credit report for up to seven years.
  • Most mortgages have a due-on-sale clause. Federal law defines it as a clause that lets the lender call the whole loan due if the property is sold or transferred without its written consent. Federal law lets lenders enforce these clauses, even over state laws to the contrary, with limits set out in the law.
  • Fannie Mae tells its servicers to call the loan due when ownership is transferred, unless the transfer is exempt, and to start foreclosure if it isn't paid.
  • If you have an FHA partial claim, it must be paid back when the title to the property is transferred, among other events.
  • The CFPB lists being pushed to sign over the title to your home as a warning sign of a foreclosure relief scam. Freddie Mac warns that once a deed is transferred in a title scam, you may never own the home again.

Taking over payments does mean signing the deed over to me, so I want you to go in with your eyes open. Get every term in writing, including what happens if the lender calls the loan due. Make sure you can check that each payment was made, for example through your loan's online account. And have a housing counselor or a lawyer read the agreement before you sign.

What I need to see to make an offer

  • Your latest mortgage statement, showing the balance, the monthly payment and the interest rate.
  • How far behind you are, the amount to bring the loan current if you have it, and any foreclosure notice or sale date.
  • What kind of loan it is, if you know: conventional, FHA, VA or USDA, and any second mortgage or partial claim.
  • The address, and a few photos or a walk-through.

Sources

  1. Freddie Mac: Options to stay in your home (myhome.freddiemac.com)
  2. CFPB: A person I hired to help with my mortgage advised me to stop making payments on my mortgage loan so I could qualify for a loan modification. Do I have to do this? (consumerfinance.gov)
  3. CFPB: How long does information stay on my credit report? (consumerfinance.gov)
  4. 12 U.S.C. 1701j-3: Preemption of due-on-sale prohibitions (GovInfo) (govinfo.gov)
  5. Fannie Mae Servicing Guide: Enforcing the Due-on-Sale (or Due-on-Transfer) Provision (servicing-guide.fanniemae.com)
  6. HUD: FHA’s Loss Mitigation Program (hud.gov)
  7. CFPB: How to spot and avoid foreclosure relief scams (consumerfinance.gov)
  8. Freddie Mac: Avoiding fraud (myhome.freddiemac.com)

Want me to look at your situation?

Tell me about the house and where things stand. I'll look at the ways I could buy it, and we can talk through how they compare with your other options. I never charge homeowners anything.

Ask about my house