I had been chasing a property in foreclosure for a while. I really like the area and wanted to move in for a primary residence, and originally I had tried to negotiate a loan modification with the bank on behalf of the seller with the intention of taking over the property subject-to once the mod went through. The loan modification was eventually rejected (it was a rental property for the seller and therefore not eligible for many government programs). Someone gave me this idea and I wanted to see your opinion on it.
They suggested I have the seller sign the deed over to me anyway. Once I get ownership, then I can negotiate with the bank and try to convince them to give me a new loan on the property. If they aren’t interested and decide to foreclose anyway, it wouldn’t be any sweat off my back. My friend also pointed out that transferring title gives the banks lawyers a headache since it’s an additional layer of complexity and legal hassle to foreclose on an owner-occupied property, which it would be since I would move in.
Are there any risks in proceeding this way? Are there any additional strategies I can try to use to my advantage?
If it won't be modified for the owner (Borrower of record) there not going to modify it for you so why bother to get on deed, as the lender still can not speak to you because your not the borrower of record! I know your going to get permission from the original owner to talk to his lender, however the lender does not have to talk to you and once they see the deed change, there going to foreclose as fast as they can anyway!
You don’t cause any more trouble for the bank (Lender) you don’t believe for a minute that this stops or somehow create’s a problem the lender can’t handle your kidding your self! Now if you take deed to anyone’s property it should concern you, your purporting to be a responsible party and want someone to trust that you will make thier payments and take care of there property, to take over thier mortgage! Have a little principle in how you operate and try to instill some ethical position to take on someone else’s property!
In some states if you go on Deed you can be named as an additional party to the lenders default suit and actions to recover the shortfall between foreclosure sale and original amount owed, “Now as they say: Go and do the right thing”!
If you can not qualify for a mortgage and pay a down payment then look for a Lease Option or another Subject To property not in default, and if your going to ask for a mortgage or agreement based on your performance then do the responsible thing and intend to make every payment as agreed.
It’s tough enough being an investor without a few people ruining our investor reputation for everybody!