Yes they do!  When people are in a distressed situation, some definitely do.  What is a distressed situation?  It can be anything.  Stress levels are different for different people.  For many it is a financial situation.  Being behind on their mortgage payments is one of the most common.  Others are in a distressed situation because of a divorce, death in the family, medical situation, bad memories in a house, or, just wanting to move.  All of these situations are something that tugs at my emotions, and I always ask questions to make sure there isn't something they have not thought of to remedy their situation.  Especially in a foreclosure situation, they may not know what to do.  I also have an article that I wrote previously that I give them to outline alternatives.

     Just today in looking at real estate classifieds online, I saw two examples of this.  One ad read:  "Other homes in neighborhood sell for $147,000 to $154,000.  If you take over payments of $1100 you can have the house.  Mortgage balance $112,000.  I just want the house out of my name."

     The other ad read:  "For sale for $115,000.  Appraised for $142,000 four years ago.  I want to pay them before they foreclose.

     Both of these examples are owners in distress.  They may feel it is not worth the hassle, and time to try to get any more for their house.  They just want to put this situation behind them, and move on with their life.

     Recently I had a situation where a lady had just put out a "For Sale" by owner sign, and it was the first time I drove through that neighborhood.  As I sat in her drive way, I called the number on the sign, and asked her what she was asking, etc.  I asked her why she was moving.  She said she wanted to move back to where her relatives live.  So, I asked her if she would consider selling the house by lease option, or by taking over the payments.  She said she would be interested.  So after I checked everything out (due diligence),  we agreed for the deed to be in my name, I would pay her $1,000 to help with her moving expenses, and I would take over her payments.  This is called buying the house "subject to".  The two ad examples above are good examples of owners who would be open to a sale by "subject to".  Many times with a pre foreclosure purchase, back fees and payments are caught up on the mortgage, then the home is taken "subject to".

     Is "subject to" legal?  Yes it is.  I always stress good ethics in any of my real estate investing.  If a person is ready to get rid of their problem, you don't have to twist their arm, they practically beg to give you the house.  "Subject to" is a line on the HUD1 on both the seller side, and the buyer side.  There are some risks involved.  For the seller, What if the buyer doesn't make those payments?  There are safeguards for this which I will explain better in another post.  For the seller, and the buyer, What if the bank calls the loan due?  There are safeguards for that also.  The "due on sale clause" which was implemented in the 80's when interest rates were around 15%, is stated as at the banks option, the loan can be called due on sale.  It is a possibility the bank would call the loan due, but not a probability if payments are being made on time.  They would not get that much higher interest rate, and it is costly for the bank to do this.  In fact, in the "subject to" loan I had, one time when I called my payment in, a representative of the bank asked me if I was buying the property "subject to".  I cringed, but answered, yes, I was.  The response was OK, just keep making the payments.

     William Tingle is a Georgia investor from Macon.  He is an expert in the Subject To method.  He has many training courses, and training events that will teach you all the details of a Subject To transaction.  If you click on the ad below, you will be able to get the details of these products.  (Sorry, scroll all the way down the bottom of the page for the ad.)

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