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Silver Trusted Contributor
Michelle1x
Posts: 1,063
Registered: ‎02-17-2008
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question- how to "takeover" a mortgage

So I have this neighbor who might want (or have to) move and I am wondering if there is any way I can do something clever like give her a check and sign over the mortgage to my name, as if it were some kind of relative transfer?  She's got one of those low Obama mortgages.

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tjh
Posts: 4,967
Registered: ‎01-09-2010
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Re: question- how to "takeover" a mortgage

The mortgage should say within the original documents whether it is assumable (tranferable). 

 

It is my understanding that mortgages have specifically NOT allowed assumuability for a long time.

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elt1
Posts: 5,047
Registered: ‎01-04-2010
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Re: question- how to "takeover" a mortgage


Michelle1x wrote:

So I have this neighbor who might want (or have to) move and I am wondering if there is any way I can do something clever like give her a check and sign over the mortgage to my name, as if it were some kind of relative transfer?  She's got one of those low Obama mortgages.


the only way to do it is with a contract of sale. Her name will still be on the deed and if you default her credit will be ruined..it was commonly done in the early 80's

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Dukey
Posts: 676
Registered: ‎07-08-2011
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Re: question- how to "takeover" a mortgage


elt1 wrote:

Michelle1x wrote:

So I have this neighbor who might want (or have to) move and I am wondering if there is any way I can do something clever like give her a check and sign over the mortgage to my name, as if it were some kind of relative transfer?  She's got one of those low Obama mortgages.


the only way to do it is with a contract of sale. Her name will still be on the deed and if you default her credit will be ruined..it was commonly done in the early 80's


Correct - I recall all the rage about assuming seller loan schemes (and way to coax in buyers) back in late 70s when mortgage interest rate was in the mid to high teens.  Of course Volcker was forced to raise interest rates to reign in on inflation back in those days. 

 

And all them money printing and QE to oblivion will catch up with the economy sometime in the future and the Fed will be forced to raise interest rates to fight the inflation monster while just about every country including EU and now Japan is opting for Keynesian wetdream of printing money not to mention currency devaluations (often leading to currency wars) to be more competitive.  Folks - this has happened before back in the late 20's and 30's so enjoy the ride and ultra low mortgage rates.

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elt1
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Registered: ‎01-04-2010
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Re: question- how to "takeover" a mortgage

[ Edited ]

A contract of sale is a similar quality of ownership to a lease option. But it definitey puts the buyer in the driver's seat. It also locks in the old tax rate. But the state can come after you(buyer) for the extra property tax once title is officially put in the buyer's name. The main motivation for a seller would be to get a price higher than appraisal. In an up market it makes sense. In a down market it can be a disaster for both parties.. As far as Duckey's comments. The main reason people did it in the 70/80's was because rates skyrocketed( and assumable loans went away), but so did prices. I doubt his doomsday prediction of soaring rates and lower prices..didn't happen even the Depression. BTW, nobody is doing contract of sale deals these days. Sellers can get over asking cash offers, why would they bother?

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buyinghouse
Posts: 5,879
Registered: ‎04-23-2011
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Re: question- how to "takeover" a mortgage


Michelle1x wrote:

So I have this neighbor who might want (or have to) move and I am wondering if there is any way I can do something clever like give her a check and sign over the mortgage to my name, as if it were some kind of relative transfer?  She's got one of those low Obama mortgages.


   Those Obama's mortgages are a product of the banks. They do a loan modification, they lower the % to 2.5% or so, extend the loan to 40 years and everybody goes home so happy. Well, I heard the loan is a 5/1, or in plain English the % is going to be at the current rate when the 5 years expire. If the rates are going to go up in 3 years, home owners with those loans are sitting on a bomb.

  Oh my God! Did I sound like...................:smileyvery-happy:

Silver Trusted Contributor
Michelle1x
Posts: 1,063
Registered: ‎02-17-2008
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Re: question- how to "takeover" a mortgage

So a few more details- this is a distressed seller, she hasn't worked in a year and is running out of money.  Her heart isn't here anyway, it is in Tahoe or somewhere where she could start an organic gardening business or some such.  Her house is in an old established (and expensive) part of San Jose but it is a deferred maintenance nightmare, mold in the one bathroom and plumbing issues- tree roots I am sure- she never paid for a cleanout to be installed- etc.

 

If she sold, she could get $700K for the place but with the 6% RE fee.  Or, I could just walk over there an hand her $150K cash and take the deed somehow if it was possible to assume the mortgage.  She would have the same amt of cash from me much easier and could rent back.   I knew it was a wierd longshot but I was thinking, maybe there was some way legally to transfer the title to me, or draw up a contract to make me a "cosigner" on an existing loan, except I make the payments now and have a contract that says after 3 years I own it if I give her up front cash- something like that.

 

You are of course thinking, why don't I just drive around and buy a $700K place, put $150K-$200 down and get a mortgage?  Why bother with this.  A few reasons, 1- I couldn't get a low loan rate like that on a rental.  2-I think I would have a hard time qualifying for another house right now even though I have no problems whatsoever affording it, 3-her place is a sort of gem in the rough, on the open mkt I would be outbid by flippers. 

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elt1
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Re: question- how to "takeover" a mortgage

"If she sold, she could get $700K for the place but with the 6% RE fee.  Or, I could just walk over there an hand her $150K cash and take the deed somehow if it was possible to assume the mortgage.  She would have the same amt of cash from me much easier and could rent back.   I knew it was a wierd longshot but I was thinking, maybe there was some way legally to transfer the title to me, or draw up a contract to make me a "cosigner" on an existing loan, except I make the payments now and have a contract that says after 3 years I own it if I give her up front cash- something like that."

 

 

Sounds a lot like a lease option to me...If you try to play around with the loan, you could commit loan fraud...a federal crime with big jail time..better talk to a lawyer.

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buyinghouse
Posts: 5,879
Registered: ‎04-23-2011
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Re: question- how to "takeover" a mortgage

Michelle, why don't you look for a partner in crime and buy it? There are many investors/flippers here, did you know?

Silver Trusted Contributor
SamShuehRealtor
Posts: 935
Registered: ‎10-27-2008
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Re: question- how to "takeover" a mortgage

[ Edited ]

I believe evey loan has a due-on-sale clause. The law changed around 1989.

 

If your neighbor is underwater behind with mortgage it is best to unload the home and you will get a chance when it is up for sale. If you think they have a risky product, the lender takes care of the responsible borrowers and not so kind to those not responsible. You can send me a private msg.