sub 2 on forclosure?

Situation: There’s a beautiful home my wife and I are looking at that is going to sherriff auction beginning of November. The home is valued at roughly $425k. The mortgage owed is $330k.

How can I help the owner from losing his home while getting the house? Can he sub 2 the deed, and is there a way I can get the mortgage in my name also? It doesn’t matter if the bank calls on the note, I can pay cash for the note in that instance.

What would you recommend?

:cool HEY if you can pay cash for the note buy the paper from the bank and just be done with it

Ah, never though of that! :biggrin

But then, wouldn’t I have to foreclose on them? Wouldn’t I have to outbid everyone at the sherrif sale, too? That seems to be a hassle…


You are correct if you purchase the note from the Lender you are now the new lender and they are still in the house with the Deed in their name. So you would have to foreclose if they did not pay you.

You can Sub-2 the house, make up the back payments, have them transfer the deed to your name. Give them some U-Haul money for the deed and make sure they are out of the house before you do anything monetarily.

Now, since you will be the owner you can re-finance or payoff the note at your pleasure. Another thing to check is the foreclosure laws in your state so you are not falling under some statute that allows a certain percentile that you must to pay for the property when an owner is in foreclosure.

John $Cash$ Locke

:cool HEY or you could get a deed -in-lue before you ever went and payed off the note !!!

THEN you are still the owner and they have given you the property so you do not have to go through forclosure with them !!! AND you can still if you want give them some u- hall money to get gone

THIS is all a whole lot less BS really and you may even get the bank to take less then owed for the cash out on the note ??

Thanks for the responses. So let me see if I get this straight

  1. Approach owner telling them I would like to help them avoid foreclosure. Offer, say, 10K for them to sign over the deed in lieu of foreclosure

  2. approach bank and offer to buy the note, say 10k below what is owed.

  3. file deed, pay off note.

Am I missing anything?


Deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.

The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The principal advantage to the borrower is that it immediately releases him from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he would in a formal foreclosure. Advantages to a lender include a reduction in the time and cost of a repossession, and additional advantages if the borrower subsequently files for bankruptcy.

In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred. Both sides must enter into the transaction voluntarily and in good faith. The settlement agreement must have total consideration that is at least equal to the fair market value of the property being conveyed. Generally, the lender will not proceed with a deed in lieu of foreclosure if the current fair market value of the property exceeds the outstanding indebtedness of the borrower.

Because of the requirement that the instrument be voluntary, lenders will often not act upon a deed in lieu of foreclosure unless they receive a written offer of such a conveyance from the borrower that specifically states that the offer to enter into negotiations is being made voluntarily. This will enact the parol evidence rule and protect the lender from a possible subsequent claim that the lender acted in bad faith or pressured the borrower into the settlement. Both sides may then proceed with settlement negotiations.

Neither the borrower nor the lender is obliged to proceed with the deed in lieu of foreclosure until a final agreement is reached.

John $Cash$ Locke

PS: Your are not the institution who is Foreclosing on the property.

I see, I can’t get an agreement from the one going through foreclosure unless I purchase the note first.

Any other creative ideas? Should I just take my chances and wait for the auction to bid on it or try a short sale?

:cool FIRST YOU should find out from the bank how much the pay off would be ?? THIS would besoyou know you can pay it . BUT to do this you need the owner to give you papers saying the bank can tell you THEN you can move ahead on the rest of things if you are able to pay off the note now >>> keep inmind they will not refinance it in your name to pay it off !! YOU will need to bring in funds from some where else