First let me preface this by saying I’m in PA, so I’m doing my first Sub2 without the use of a land trust (Pa is apparently one of the few states that imposes the transfer tax on a land trust in this situation). My question is simply on the best plan for making the mortgage payments, would it be to use some kind of loan servicing company? Any and all suggestions would be appreciated.
Glad to meet you.
I have been using Loan Servicing Companies (LSC) for about 15 years to service my buyers payments.
My reasoning is and has been, that the payments go to a Licensed and Bonded company and then forwarded to the lender, which looks good in the eyes of the seller and buyer. We have all heard of the payments sent directly to an investor that did not reach the lender in Subject To deals, although in the minority it still causes concerns for buyers and sellers.
The LSC also provides your buyer if using a Contract for Deed an accounting of the interest paid for tax purposes at the end of the year. Also they can provide a payment history, which is recognized by a lender when your buyer’s time comes to re-finance the property. If you have a pack payment as monthly passive income they will send you this money when you request it.
The major LSC’s are online so you can check your account and see if your payments are being received in a timely manner.
It also is just one less thing you have to concentrate on when out doing Subject To deals and helps keep you focused.
John $Cash$ Locke
Thanks for the response, would I be out of line to ask for recommendations for loan servicing companies? The offer I made Friday didn’t end up sub2 (don’t feel bad for me, I did get the deal and it will be a good one) but I just see lots of opportunities for me to get agressive on Sub2 and this would be a great tool to have going forward. :deal
First remember that it does not matter where the LSC is located as house payments are not necessarily made in the state the property is located in.
I have been very pleased with US Loan Servicing http://www.usloanservicing.com/ and what they offer a creative investor.
Just glad you got the deal and hope you get many more.
John $Cash$ Locke
Thanks for the recommendation. I checked them out and it’s just what I was looking for. It will be a useful tool both for me and for adding credibility to the process for a homeowner to consider selling Sub2. I just absolutely believe there is tremendous opportunity for me (or most anyone who gets educated and prepared) to acquire sub2 and then on a 2-1 or 3-1 flip vs. hold with L/O exit.
There’s been a couple of occasions in my life where I’ve developed a ridiculous confidence in my ability to to something I’ve never done before, and this is one of those times (I was right the other 2 times). I heard a great quote the other day and I’ll mangle it by saying it was something like “…our imagination is the comming attractions of our life.”
There is absolutley no need to use a 3rd party when sending inyour payments. Send in a bank check or money order or you can even set up online bill pay if the lender offers it. If you are concerned that the lender will call the note due, they won’t. Even if you send in personal checks they won’t call it due. THe note is performing so it is an asset calling it due will only make the note a liablity. Would you call a note due if all of the payments were paid on time? That would be a pretty poor business decision especailly in this market.
Don’t waste your time with 3rd party!!
I hear what you’re saying. For me it was less about the DOSC and more about making the homeowner feel good about systems in place to insure timely payment of the mortgage they are so kindly letting me utilize.
Ok, but what does it matter if a third party pays the mortgage… the money to pay the mortgage is coming from your account. Your going to pay for a service that is not neccessary and is just another process that needs to be completed. KISS (keep it simple silly)