sub2 and due on sale

To those of you who have actually done sub2’s? Isn’t the due on sale clause in the mortgage a problem and how do you get around it?


Howdy Zoey:

There are tons of posts about sub2 on this form going back 2 years. There are several creative ways to get around it and much debate on each including ignoring it all together, creating trusts, lease purchases and many more. I have used one where we ignored it and had the seller sign a management contract giving me authority to deal with the lender. You will not go to jail but there is a slim possibility the note may be called and you will be forced to sell or refinance quickly. In a conversation yesterday REO says that some states are making more laws and cracking down on creative sub2 deals. Maybe CASH can add some input here as well. He is the KING of Sub2 deals with over 500 deals.


Thank you for your kind words.

Well my stance is real simple “make the payments on time” and remember you did not sign the Due on Sale clause your seller did.

Guess it all about how you look at things and if your paperwork is in order the DOS should present no problem.

Short recent story, a student of mine called me and said he had a call from Countrywide (the most feared DOS calling lender out in creative land from what I hear).

My students seller called Countrywide and told them he transferred the deed to my student, this seller was 4 months behind, had a few taxes due, which my student paid and caught up the back payments. The person from Countrywide related what he responded to the seller “yes, he could tell that something happended, because the payements were current and on time” and bid my student a good day.

John $Cash$ Locke