HOW TO INVEST ‘SUBJECT TO’ AND OVERCOME THE ‘DUE ON SALE’ CLAUSE MATT THERIAULT
So, that’s how to invest ‘subject to’ sneaking in the back door. Let’s try the front door now.
Imagine the same scenario with our motivated seller in our previous example. As soon as you get an
agreement from the seller allowing you to take over the property subject to the existing financing, turn the
entire file over to a third party servicing company and let them do the rest. Let them do everything. Let them
communicate with the seller. Let them communicate with the lender. Completely remove yourself from all parts
of that conversation. And here’s why…
It’s similar to how when attorneys talk to other attorneys. They speak the same language. They respect each
other’s position. They just pass paperwork back and forth like it’s an everyday thing… because it is. And when
note servicing companies are speaking to other note servicing companies, it’s just like that. It’s just passing
paperwork back and forth.
Once the note servicing companies have completed their duties, all there is to do is make the payments.
Actually, in both scenarios you want to make the payments. Do NOT miss a payment. You put in all that work,
got a smokin‘ deal, and you stand to make a great profit. Don’t mess it up by missing or being late with a
payment. Don’t give the lender any reason to call you. That’s one of your strongest lines of defense against the
“due on sale” clause, and here’s why…
In today’s market with the amount of foreclosures, pre-foreclosures, short sales and loan mods, do you think
the lender would have the man power or even the interest to police their accounts that are in good standing???
No way!