Why Do a Subject-To Mortgage Assignment?
Subject-to mortgage assignment
The subject-to mortgage assignment has become quite popular as of late. The subject-to mortgage assignment is a combines the following strategies: subject-to, wrap around mortgage, and wholesale.
The subject-to mortgage assignment was developed to allow the investor to purchase an un-sellable house and sell to an un-loanable buyer. An ‘un-sellable- house is such due to lack of equity or a high interest rate mortgage. Un-loanable buyers are those 90% of the population that doesn’t qualify for a bank loan.
The main difference between the subject-to mortgage assignment and the subject-to wrap around mortgage is that once the investor has the property under contract with owner financing in place, the investor wholesales, or assigns the contract to the end buyer, and then steps away from the deal.
Subject-to mortgage assignment benefits all
The benefit of the subject-to mortgage assignment to the seller is that they may now be able to sell house with little, no, or negative equity and with a higher than market average interest rate. Also, since the investor has assigned the contract to the end buyer, the original seller is now collecting the monthly payments and will benefit from any equity created in the wrap around mortgage.
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The benefit of the subject-to mortgage assignment to the investor is that they can make a simple no money no credit wholesale deal and profit from assigning a contract that they otherwise would not have been able to profit.
The benefit of the subject-to mortgage assignment strategy for the end buyer is that they are able to purchase a home that they otherwise could not have qualified for under the current stringent lending requirements banks have.
Overall, the subject-to mortgage assignment strategy matches a high supply of distressed sellers with a high demand for homes by unqualified buyers, which is a good equation for profits!
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