Has anyone run into any problems with the Due on sale clause in a mortgage?
What does that have to do with wholesaling?
You never have to take title to a property in wholesale deals. Due on sale only applies when you are holding a property with an existing note and as far as I know transfer title into a trust as a result of having the owner deed the property over to you subject to the existing mortgage. Maybe this part of my logic needs to be cleaned up a little but I know I’m very close.
Lenders don’t even call the due on sale as long as you keep the payments current.
The whole subject has zero to do with wholesaling.
How did you make the leap of assumption that he was talking exclusively about Wholesaling?
His question was, “Has anyone run into any problems with the Due on sale clause in a mortgage?” and this is the Bird Dogs, Wholesaling, Flipping Properties Forum.
You are correct, though, that lenders won’t generally invoke the DOSC if the the payments are coming in - especially in this market.
I’ve done plenty of subject-to’s and negotiated just as many, with no problems whatsoever
Don’t try to hide anything, but at the same time, there’s no reason to notify the lender that
you’re taking the property subject-to.
Great information here! Thanks for the reply’s. Its good to know you guys have been making out ok with it, as a newbie it kinda frightened me to hear of this clause, and yes, wholesaling. Thank you!
as long as you make payments on the mortgage that you have taken “subject to” on time, you should be ok. Try to resell or refinance the property as quickly as possible to minimize the risk.
I have never had that issue happen, however I have had situations recently where I decided to give the home back to the original owners. Didn’t want to hold on to a house that was too far under water due to too many foreclosures, which would take years to have a value recovery
I made the assumption to wholesaling because this is the wholesaling forum. So it in my opinion was something he probably thought was relevant to wholesaling
btw, yes you can wholesale a house purchased “subject to” the existing mortgage. Be cautious when doing this, making sure to pre-qualify the person that you’re wholesaling the deal to (income, experience, assets, gut feel, etc). The last thing you want is them screwing things up by not being able to make payments, and then really risking the chance of having the due on sale clause come into play.
Hi it seems risky in case you are out of cash or can’t get the money. What’s the consequence in situation like this or the clause is appropriate to apply?