Here is a good example of one of the dangers of subject to investing…bad publicity from deals gone wrong.
http://www.wfaa.com/news/investigates/Sales-of-the-Decade-133399473.html
Well, someone had a slow news day.
In the old days, when non-qualifying FHA assumptions were still available, the seller often did not realize that the loans not only still showed up on their credit, but so did the buyer’s repayment patterns. Worse, if the loan went into default, FHA could go after the original borrower for the deficiencies.
So, a formally, and legally assumed loan did not relieve the original borrower from liability for repayment. This was a surprise to lots of borrowers, after they let their loan(s) be assumed.
I don’t believe this story in the paper happened just exactly like they say it did. There’s too much money to be made off even low-equity situations, to allow one’s reputation to get damaged this way.
The more common problem, as far as I’m familiar with, is a seller changing their mind mid-stream, after we’ve spent time and money reselling the house.
BTW, this story sounds eerily like a previous story (out of Texas, no less) with an out of state investor screwing a Sub2 seller by not bringing the mortgage current, or never bringing it current while ostensibly looking for a sucker to take an upside down house loan over …and the seller getting all upset that the promises of ‘something for nothing’ didn’t pan out as they hallucinated it would.
Another problem with this story is that only amateurs or the unskilled would actually think it makes sense to bail out an upside down, delinquent seller’s loan, and still make money on the deal. It doesn’t work that way.
Owner occupants will do this, yes. But I don’t know anyone who deals with Sub2’s with any regularity, that would make up payments, and than expect to find a buyer with enough cash to bring things current, and then make it worth the investors time to babysit. It doesn’t happen.
However, I would love to hear, even the anecdotal example, of how this could be done profitably.
Back at the ranch, it sounds like this Steve guy tried to help this woman with her upside down, delinquent loan, which he should have stayed away from, and now is paying like he never thought possible. Most likely he’s an amateur trying to go ‘pro’, but got tangled up with this Texas Witch.
Notice they refer to the bad guy as “Sicilian” …Really? I can just hear the theme song from the “Godfather” being played in the background during this story.
The sad thing is - The Real Advantage is a legitimate and honest real estate investment company in the Dallas area. They are very much on the “up and up” in the world of real estate investing. So it’s just some bad press. Note - the guy’s name is Tony Sicilian - the reporter was not saying some sort of Italian racist junk or anything. LOL!!