Re-financing a "Subject 2" - Posted by J. Christopher

Real Estate Investing Real Estate Financing
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Posted by James Strange on November 06, 2002 at 19:02:33:

I am not an expert on Subject 2 (it is outside my comfort zone) but I do know some about finance. So if you post some details perhaps you can get some help.

Are trying to refi in your name or the sellers?

As for Subject 2 in Lousiana it is legal it is even a subject in mortgage brokers school. But I do not know about your state. If you are worried get the advice from a PAID RE attorney.

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Re-financing a “Subject 2” - Posted by J. Christopher

Posted by J. Christopher on November 05, 2002 at 19:41:09:

Hello all,

I bought a property Subject 2 which has (3) loans. I’d like to refinance and consolidate all loans while pulling cash out.

I’ve have spoken with several mortgage brokers and they told me that 1: you cannot refinance a loan that’s not in your name AND 2: it’s illegal to do a Subject 2 transaction.

Has anyone dealt with a Lender that will refinance a Subject 2 loan, and, can you pass that name along to me?

Any assistance would be greatly appreciated.

Sincerely,

J. Christopher

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Re: Re-financing a “Subject 2” - Posted by Brian(ATL)

Posted by Brian(ATL) on January 03, 2003 at 20:52:46:

I have the same problem. Acquired a nice property SUB2 in Sept.02.

Appraises around 90k, two liens total out at 75k. I have the deed, but have been unable to find a lendor who will let me refinance the property into my name.

Have you had any luck in your search?

Thanks in advance,

Brian Anderson

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Re: Re-financing a “Subject 2” - Posted by GMann

Posted by GMann on November 13, 2002 at 12:40:27:

Subject-To is not illegal for the most part. Sounds like you need to find someone else. Here’s the skinny on the refinance.

  1. Lenders do not like subject-to loans for a regular refinance. You can have defered maintainence (5% of the value and dollar amount limits case by case) If it has more than cosmetic work to be done you will need a construction loan.

  2. If you OWN (not lease purchase/land contract) the property now and the sellers have 3 mortgages I will assume you have owner financing. If this is the case you can do a refinance if you can get approved on a conventional (Fannie Mae/Freddie Mac) program. They do some loans with minor credit impairments with their Expanded Approval Programs. You will more than likely have to debt qualify. Those programs are the only ones out there that don’t have ownership seasoning requirements of less than 12 months. Non-conforming (sub-prime) lenders will require 12 months of ownership seasoning. Hard Money lenders (Big rates/big fees) will be loose on the seasoning but they will need a 50-65% loan to value.

Best of luck!