If I sell my home subject to, can I get another mortgage right away?

I have a home that is worth about what is owed and have been approached by a subject to investor who would be interested in taking over the mortgage. I want to move because the house is too small and no longer meets our needs. If I sign the home over and bring the documents to a mortgage broker showing that I have an agreement from the buyer to make the payments, can I get another mortgage, or will the broker still consider my previous mortgage in my debt to income ratio? I should also add that our mortgage was discharged in a CH7 BK in 2013, so if the investor were to default there would be no deficiency judgement against us, and as long as we’re in another home already it would be irrelevant, aside from the fact that we’d have a foreclosure on our record. Again, the critical thing I need to know is can we qualify for another mortgage with the documentation of the subject to deal in hand?

Yes, you can get a new mortgage right away.

However, the mortgage broker is not the actual party that requires anything, it’s the lender. Brokers just put loan applications together. Broker’s represent banks, but are not banks.

Meantime, all mortgages are sold to the government. So each lender will want proof of sale.

The most common ‘proof of sale’ is the HUD1 Settlement Statement. You should receive that document at closing. Sometimes they want additional information, but as long as you actually sold the house, that’s what you’re needing to prove.

Hope it goes well.

OK-what wasn’t clear to me before is whether or not this actually counted as a “sale” since no money will change hands. I would merely be signing the deed over to the buyer and letting them take over the payments. What you’re saying is that as long as I have a complete HUD1 Settlement Statement in hand, the bank will be satisfied that I am no longer obligated to the mortgage even though a default would technically count against me? In that case I see no reason not to go ahead with the deal, except that I think I may check with a few banks (not brokers) to make sure that they will accept this type of transaction.

No, you had it right the first time. The mortgage broker will tell you what the lender wants. Going to several banks is a waste of time, if not a huge risk to your loan being called, if one of them happens to be your current lender…

Tell the broker what you’re doing and let him tell you what lenders will want. Then it’s a matter of getting the best interest rate locked in.

You’ll get lousy answers asking banks about sub2 details. I mean come on.

Chances are you’re not going to go to the same lender you’ve borrowed from, and tell them that you just let some goof take over their loan, are you?

Just talk with your loan broker and forget stirring up the bee’s nest with ‘what if’ questions to a bunch of banks.

What you are wanting to do is NOT illegal, it’s just not what the bank is interested in, or wants to encourage.


I get what you’re saying. No, I am not going to borrow from my current lender or deal with them in any way-no need to with the thousands of choices out there.

When you fill out the loan application for a new loan with another bank, you will disclose that you have a loan on the first house. If you sell it subject-to, you are still responsible for that loan. The second bank doesn’t care about the subject to. They will qualify you based on your ability to carry two loans.

Good luck,

George Krajacic

Mr. Cornerstone, your post is not based on experience, but on supposition. Otherwise, yeah, I suppose, if you do this completely bass ackwardly.

How many of these deals have you done otherwise to provide such advice?

Once again, my buddy Jay in SoCal has another Eloquent Posting!

Good job!