Sub2 snafu?

I am new to the Sub2 arena. In discussing an offer with my first client, I was asked the question, “How do I get another mortgage for a new place if I still have this one on my record?” I had not come across any advice for this in my training, and was quite dumbfounded. I stammered out the advice that he could possibly show the property as a rental to the new mortgage company, which would offset the debt with rental income. But I am not certain this would fly, as he would most likely be required to show a rental contract, which is not what I would be giving him.

Any advice on how to respond or overcoming this logistical obstacle?


Patti, you should provide them with a sales contract, HUD-1 closing statement and your contact information. These they can show to a new lender proving they no longer own the home.

This would seem an inherent weakness in the sub2 process. The seller is not renting the house so cannot show rental income to offset the mortgage payment. They have simply given up all control and ownership of the property in the hopes the new owner will continue to make the mortgage payments. Perhaps selling with a wrap mortgage would improve the seller’s leverage to obtain financing down the road, while they still have the original mortgage obligation they have a contractual payment agreement with the new owner. Just my 2cents as sub2 aren’t my area of expertise.