How many behind payments?

How many payments can you get behind on before it’s too late?
How many payments do you need to be behind for a short sale?

1 Payment behind
What are the options?

2 Payments behind
What are the options?

3 Payments behind
What are the options?

4 or more payments behind
What are the options?

Howdy Jrockfl:

Usually after about the 3rd payment the lender will start the foreclosure process wher they start incurring attorney fees, appraisal, and commercial deals even environmental stuties is necessary. These fees make it harder to cure the loans as the expenses need to be paid too. I would not try a short sale until at least 3 payments are missed. BK is always an option for the owner if they have equity and otherwise qualify. The owner can also walk away or sell sub2 and get the buyer to reinstate the loan,

Hey Ted,

Thanks for your reply. I’m trying to learn as much as possible before I jump in and I want to know all of their options. Walking away is their worst option, what about sub 2? How does that work? Does that benefit me?

Also, lets say the decide to do a short sale and have 2 - 3 weeks before the auction. If the lender approves the short sale, and I make up the back payments, how much time to I have to secure financing. I would get preapproved first.

Howdy Jrockfl:

Sub2 is where you agree to make the payments and the loan stays in the sellers name. In some states you can do a lease purchase or contract for deed as well.

On most short sales you will have 30 days to close and do not have to bring the loan current. They may even postpone the sale until you can close. It is usally better to get it closed before the sale gets too close.

Sorry for all the questions, I ordered “The Pre-Foreclosure Investor’s Kit” by Thomas Lucier, just waiting on it to arrive. Thanks for the info on not having to bring it current.

Does the lender have to approve this sub 2? Is this a good way to go? So I make the payments, and it’s still in the seller’s name? Do I get them off the deed and slap me on there? Then I worry to about moving them out, correct? If I messed this up, they could be in the house rent free and I’m stuck paying the mortgage?

Howdy Jrockfl:

The lender does not know. That would be an assumption where the lender approves. They deed is in your name or could be in a trust or even help in escrow by an attorney until the loan is paid off. I prefer just to get the deed. If they are motivated enough they will sign it over.

Yes the seller can do the stay and no pay. Most do not get any money until they are out and some have even mopved out already.

Do I have to notify the lender of the sub 2? So the homeowners just sign it over to me? Then it’s up to me to work out some kind of deal to exit them out of the house. If I do they sub 2, then I need to make up the back payments etc, correct?

Which method do you prefer, short sale or sub 2? Or does it depend on their situation?

Howdy Jrockfl:

Do not notify the lender that you have bought the house. To do the sub2 you will bring the payments current. You could also just resell the house and not bring it current yourself.

I have never done a short sale. I have tried several times but the discount was not good enough. I have done mostly REO deals with the VA, FDIC, RTC, and bank trust depts etc.

It really depends on the equity and cash flow. If you can pick up a rent house or other investment property for a few back payments that will cash flow then that would not be a bad deal. If the price is too high I would do neither. I got hooked in doing zero down deals that were sub2’s years ago and did about 30 or so and lost them all because I paid too much and the cash flow was negative.

Thanks for the info Ted. You said in your attempts the discounts were not great info, how much were they offering to discount the loan? Is 20% to 35% discounted off possible? So if they owe $100K, is it realistic to obtain the loan for $65K to $80K ?

I saw this gentleman at a seminar about 2 years ago. He was a special guest at our local r.e.i.a. seminar, William Tingle. He is a very good expert in subject 2’s. Check him out at It’s very simple, plain step by step, starting from a to z and he’s very easy to understand, in my opionion.

Hope this helps