What is the Deed Program?
The Deed Program is similar to when a relocation company makes mortgage payments for an employee on a house they’ve moved out of. The loan remains in the name of the employee, while the deed is transferred to the name of the relocation company. The relocation company pays the mortgage on the employee’s behalf until it is paid in full. The same process would occur with your property. The closing would be done through a local licensed real estate attorney. The attorney would transfer the deed into our company name and the current mortgage loan would remain in place until it has been paid off in full.
Is this legal?
Yes, on line 203 of the HUD statement (document provided when a home is bought/sold) there is a line option that indicates a property is being sold ‘subject to existing financing’. This is exactly what we are doing by purchasing your property under this option. We are keeping your current mortgage in place and making the payments on your behalf.
Is this the best option for me?
The motivation to sell a property varies from seller to seller, so that would be for you to decide. This option typically works best for a seller who has just one (or more) of the following:
- Needs to sell and does not require a large sum of cash upfront.
- May have little or no equity in the property in its current condition making it difficult to sell through a realtor
- Has a property they no longer want and are “done with”.
- Experiencing a financial hardship or have health concerns which can make it difficult for them from keeping the loan current
- Has some equity, but needs to sell quickly due to relocation, military orders, or other reasons
How long will the mortgage stay in my name?
The timeframe to pay off the mortgage is typically set for the remaining life of the loan. However, as our main profit is made once the property sells, it is our priority to pay off the mortgage balance sooner rather than later.
How long will it take to close?
We typically close within 30 business days, and sometimes sooner/later depending upon the needs of the seller, status of the mortgage (example: if there were a pending foreclosure date) and/or if other issues impacting closing arise.
Who handles maintenance and repairs on the property?
We do, our company will be responsible for all maintenance and repairs on the property.
With the loan remaining in my name, how will that impact me getting a new mortgage in the future?
We cannot make any guarantees over future creditworthiness nor lending guidelines, however, if the lender requests any additional documents to confirm your prior mortgage is being paid, just contact us and we’ll be happy to provide them. There are ways we can structure the deal to help make it easier for you to purchase down the road. Just let us know what your plans are.
Are there any out-of-pocket expenses for me to sell my home using this option?
No, our company covers all expenses related to closing the transaction with the real estate attorney.
Do I need to clean out the property or make any repairs/updates before the property is sold?
No, our company will purchase the property in as-is condition.
What happens if your company does not make the mortgage payments?
If payments are not made, it would reflect negatively on your credit report. However, as our business reputation and financial investments (expenses for bringing the loan current, paying for repairs/maintenance, closing costs, and/or insurance etc.) would also be on the line, you can rest assured all payments will be made timely.
How can I confirm payments are being made?
Payment confirmations can be made by contacting the lender’s customer service number or logging into your online account with the lender.
How much money will I receive at closing?
The amount we can offer (if any) depends upon the total amount needed to bring the loan current, the amount of equity remaining, repairs needed to get the property to a rent-ready status, and/or any additional liens we are required to pay off in order to close the transaction. To ensure we keep a set amount in reserves for covering all expenses related to closing fees, maintenance of the property, insurance etc. we typically do not provide substantially large amounts of money to sellers at closing. Those sellers seeking a substantial payout (at closing) may find the better option is to list with a realtor.
If I have little to no equity in my property, can I use this option to sell?
Yes, equity is not a factor, as we purchase properties with varying amounts of equity.
If I am behind on my mortgage and/or facing foreclosure, will you bring my loan current?
Yes, at closing, the past due amount will be placed in escrow with the closing attorney. The attorney will then forward it directly to the lender via wire transfer, thus bringing the loan current.
How will using The Deed Program affect my credit?
Our timely payments on your mortgage should strengthen your credit score. As the number of on-time payments grow and the loan balance decreases you should begin to see a positive impact (given other items on your credit report are also in good standing).
Do I need to notify the bank of the pending deed transfer?
No, they do not need to be notified, timely mortgage payments are the priority for the lender, not who is making the payments.
What if either my spouse or I die, what responsibility will my heirs have?
There would be no responsibility to the heirs. Since we would own the property, we’d continue to make payments to the lender as normal.
Who pays for the property insurance?
We do, our company will obtain a new non-owner-occupied policy. All parties listed on the original mortgage loan, the lender and our company will be listed as policyholders. If an insurance claim needed to be filed at any time, we would file it.
With a loan in place, how much will you purchase my property for?
Typically, the purchase price is set as the current loan payoff balance. However, if there is significant equity remaining, the total purchase price would be adjusted and the attorney would draft two (2) separate agreements (one for paying off the loan itself and the other to pay out the equity to you per the negotiated terms).
When will you start making my mortgage payments?
Payments will typically begin on the first day of the month following the 30-day period after the close and be made directly to the lender. (Example: Closing happens on August 30th, our first payment would be October 1st)*Note: If the loan is past due and/or has a potential foreclosure date, the mortgage would be brought current at closing.
Can I claim this property as a rental on my taxes once your company takes ownership?
No, as we would own the property, the tax benefits of ownership would follow.