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Southern Loan Servicing, Inc. - 2023

Subject-To Mortgage Sales with Southern Loan Servicing

Are you considering a subject-to mortgage sale for your property? It’s an enticing avenue for both buyers and sellers, but navigating the complexities can be daunting. Here, we outline some of the biggest mistakes associated with subject-to mortgage sales and how Southern Loan Servicing, as a third-party loan servicing company, can help you steer clear of these pitfalls.

1. Lack of Due Diligence: One of the most critical aspects of subject-to transactions is conducting thorough due diligence. From the buyer’s financial stability to the property’s condition and existing mortgage terms, there’s a lot to consider. Southern Loan Servicing assists both parties by providing comprehensive due diligence services, ensuring that all aspects of the transaction are thoroughly examined and understood.

2. Due on Sale Clause: Many mortgage agreements include a “due-on-sale” clause, which allows lenders to demand immediate repayment if the property changes hands. While we have rarely seen any loans called due, it can happen. Smaller banks may be more likely to do so, but all is not lost, you can change out the terms of the sale so the title doesn’t change hands but the buyer gains equitable title. (Land Contract, Contract for Deed, Bond for Deed etc.)

3. Miscommunication and Lack of Clarity: Clear communication is key in subject-to transactions. Misunderstandings or ambiguous terms can lead to disputes and legal issues. Southern Loan Servicing helps draft clear and comprehensive agreements, outlining all terms and responsibilities to ensure that both parties are on the same page. Especially explaining that the seller is NOT released from responsibility of his mortgage, and the buyer has no legal obligation to make payments to the mortgage company, only the lien between buyer and the seller.

4. Property Management Challenges: Once the subject-to sale is complete, the buyer becomes responsible for property management, including mortgage payments and maintenance. Southern Loan Servicing offers professional loan servicing solutions, handling everything from payment processing to escrow management, relieving buyers of administrative burdens and ensuring seamless financial management.

In conclusion, subject-to mortgage sales offer lucrative opportunities but require careful navigation to avoid costly mistakes. Southern Loan Servicing acts as a trusted partner, providing comprehensive loan servicing solutions to streamline transactions and mitigate risks. With our expertise and personalized support, you can confidently navigate subject-to transactions and unlock the full potential of your real estate investments.

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