USDA Loan Sub2?

Does anyone have any experience with taking a USDA loan Sub2… Can you give me the Pros & Cons Please… Or should I even touch it…



Glad to meet you.

There are no Pro’s. Any loans subsidized by federal or state programs are “subject to” having a representative of the program check to see who is living in the property. This is done at random, but is done.

If you check the paperwork on these programs you will find statements like owner must live in property, property not to be rented, etc.

John $Cash$ Locke


Thank you… Ok have you ever taken a USDA over SUB2 and learned the hard way or just never touched one… cause I got some bad advise I’m finding out… I took the property sub2 and rented it… USDA told me you can rent the property for 2 years but then it must be sold or moved back into by person on loan… But I have figured out that if I dont stop the payment assistance on loan and pay full amount I could get in trouble… Im sorry to bother you with this…



Never have taken any subsidized loans Subject To. Whenever I have done a Sub 2, I always read the loan documentation and when it has any type of restriction I pass on the deal.

The government gives the borrower payment assistance in your case, figure out that if they find out the borrower is not the person receiving the assistance, there will be a problem. If you have the deed in your entities or your name then it is clear cut that the original borrower is no longer living in the property, so this will document that you are the one taking advantage of the subsidized loan program.

No problem asking me, I think you pretty well figured out that there could be some problems with this type of loan. If they find out the deed has been transferred if someone comes by to check or otherwise, you can just about take to the bank they will call this loan due. It may be challenging for you but you might want to think about un-winding this deal.

If I can help further just let me know, I have students in all 50 states, Canada and Europe, so there is not to much I have not seen or heard about, including subsidized loans.

John $Cash$ Locke

PS: One of my Military students in Iraq just asked me about doing a Subject 2 on Mud Huts :biggrin

Thanks I appreciate it…