# Offering to take over a house. **URL:** \ **Category:** Factual Questions\ **Created:** [May 17, 2014, 8:05pm UTC](https://boards.straightdope.com/t/offering-to-take-over-a-house/688652 "2014-05-17T20:05:42Z")\ **Posts on this page:** 9\ **Page:** 3
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [May 23, 2014, 3:55pm UTC](https://boards.straightdope.com/t/offering-to-take-over-a-house/688652/41 "2014-05-23T15:55:17Z")
That just means the seller is in breach of the mortgage contract. It doesn’t mean the deed is invalid. ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [May 23, 2014, 5:09pm UTC](https://boards.straightdope.com/t/offering-to-take-over-a-house/688652/42 "2014-05-23T17:09:10Z")
What I don’t get is why when the bank basically has someone willing to make payments on a $140,000 mortgage they would rather foreclose, pay all of those expenses and then sell it for $120,000 and good luck getting the $20,000 for the ex-owner. And I get that I don’t have the magic 640 + 20% down to buy it outright but considering they’re less than 2 months from foreclosing now, what’s the difference? ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [May 23, 2014, 5:13pm UTC](https://boards.straightdope.com/t/offering-to-take-over-a-house/688652/43 "2014-05-23T17:13:22Z")
You said you can’t qualify for a loan, so what’s in it for them? There’s every chance (from their point of view) that you’re just going to default too - and then they have to begin the foreclosure process all over again. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [May 23, 2014, 6:04pm UTC](https://boards.straightdope.com/t/offering-to-take-over-a-house/688652/44 "2014-05-23T18:04:28Z")
> [@Saint\_Cad](#): > > What I don’t get is why when the bank basically has someone willing to make payments on a $140,000 mortgage they would rather foreclose, pay all of those expenses and then sell it for $120,000 and good luck getting the $20,000 for the ex-owner. > > And I get that I don’t have the magic 640 + 20% down to buy it outright but considering they’re less than 2 months from foreclosing now, what’s the difference? Would you as a bank want a customer who pays (tries to pay) $140,000 for a house worth $120,000? And… can’t qualify for a $120,000 mortgage? Sorry, it just screams “problem” to me. As I’ve said before, my rule of thumb is if the bank won’t advance you credit, why should I? I don’t know about he USA, but in Canada - when you buy a house, the bank pretty much requires mortgage insurance unless you put 20% down (or was it 25%?). They must have the paperwork to show that you meet their loan criteria, you have income to cover the loan payment. You MUST put down 5% (used to be 10%). The mortgage insurance requires it. This shows you have something invested in the house. $140,000 - you have put in $7,000 of your own money. You have a much stronger incentive to make it work if you stand to lose a hefty savings amount. (In fact, I’ve heard that if the down payment suddenly “appears” in your bank account here, they have to ask where it came from, that you did not simply get a loan from family or another bank.) If you put nothing down, it hurts nothing to walk away. I’m betting this lack of serious financial commitment would be part of the bank’s problem with your offer. Offering to overpay by $20,000 just makes them more worried. Oddly enough, due to these sorts of rules, plus the lack of mortgage interest deduction, Canada has not had the real estate meltdown the USA went through. (And rather than constantly remortgaging, most Canadians work to pay off their house.) ---
**Author:** ![Snnipe\_70E](https://avatars.discourse-cdn.com/v4/letter/s/b5a626/32.png) [@Snnipe\_70E](https://boards.straightdope.com/u/Snnipe_70E)\ **Post date:** [May 24, 2014, 2:55am UTC](https://boards.straightdope.com/t/offering-to-take-over-a-house/688652/45 "2014-05-24T02:55:44Z")
> [@md2000](#): > > What the article said: > Basically, the way I read that, the original owner has signed away his right to exercise a quitclaim until the mortgage is paid off. Theoretically, that seems to mean to me that the quitclaim’s rights and validity are at best postponed until after the mortgage is paid off. Worst case, anything signed before the mortgage is paid off is invalid. Signing a quit claim deed would be a violation of the contract, not the law. Therefore the contract is broken. The bank has a lien on the property and can now exercise the lien. ---
**Author:** ![Mama\_Zappa](https://avatars.discourse-cdn.com/v4/letter/m/71e660/32.png) [@Mama\_Zappa](https://boards.straightdope.com/u/Mama_Zappa)\ **Post date:** [May 29, 2014, 2:07am UTC](https://boards.straightdope.com/t/offering-to-take-over-a-house/688652/46 "2014-05-29T02:07:59Z")
The quit claim would not relieve the former owners of their mortgage obligation, and would in fact trigger the mortgage’s “due on sale” clause. At which point, the bank would go after the former owners - who are clearly unable to pay - and then exercise their prior rights to the property, leaving the OP literally out in the cold with nothing to show for it. Now, you COULD come to an arrangement with the owners, where you’re issued some kind of legal contract to purchase assuming you continue making the payments. They would have to remain the owners of record - and they might even have to pass the payments through to the bank lest the bank twig and say “you sold it, you sneaky bastids, FORECLOSING NOW”. Or you might make the payments to the owners, who could FAIL to remit the payments to the bank, which leads to a true foreclosure. It’s a high risk situation any way you look at it. You would think the bank would be happy to participate in an agreement such as the OP proposes: the loan is brought current, they get their cash flow, they’re spared the hassle of foreclosing and auctioning, the OP has a place to live… win-win-win situation. But the bank doesn’t know the OP’s ability to pay, the OP has a less-than-perfect credit rating and the bank is honestly likely to just say it’s not worth it. For what it’s worth, there ARE some assumable loans, or so I’ve heard. FHA and VA loans, mostly - and I don’t know how commonly those are assumable. From something I heard 20+ years ago, VA loans at least were restricted in that if you had a VA loan, and let someone assume it, you couldn’t take out another VA loan on a new place. In any case, you could certainly check with the owners to find out if it’s VA or FHA. ---
**Author:** ![handsomeharry](https://avatars.discourse-cdn.com/v4/letter/h/e9c0ed/32.png) [@handsomeharry](https://boards.straightdope.com/u/handsomeharry)\ **Post date:** [June 20, 2014, 12:07am UTC](https://boards.straightdope.com/t/offering-to-take-over-a-house/688652/47 "2014-06-20T00:07:15Z")
> [@Musicat](#): > > That would certainly be a short sale. You get the title, the the seller gets off the hook, and the bank gets the shaft. > > Here’s how you do it. Make a purchase offer to the owner, and have him sign. He will have to get bank approval. If the bank thinks it is the best choice for them, they may OK it. If there’s any way you can make personal contact with someone at the bank – that’s sometimes possible with small, local banks – see if they will work with you. > > You will need written permission from the owner to talk to the bank because you are meddling in personal finances. For that and other reasons, I strongly recommend the services of an experienced real estate agent and/or attorney. An experienced real estate agent probably won’t want to get involved in the deal as presented. ---
**Author:** ![handsomeharry](https://avatars.discourse-cdn.com/v4/letter/h/e9c0ed/32.png) [@handsomeharry](https://boards.straightdope.com/u/handsomeharry)\ **Post date:** [June 20, 2014, 12:10am UTC](https://boards.straightdope.com/t/offering-to-take-over-a-house/688652/48 "2014-06-20T00:10:08Z")
[quote=“Mama\_Zappa, post:46, topic:688652”] For what it’s worth, there ARE some assumable loans, or so I’ve heard. FHA and VA loans, mostly - and I don’t know how commonly those are assumable. QUOTE] IIRC, about 20 years or more ago, only some VA loans were assumable. All other assumable loans stopped being offered, because of all of the “Nothing Down” deals of the 80s that went bust. Or some other such. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [June 20, 2014, 5:34am UTC](https://boards.straightdope.com/t/offering-to-take-over-a-house/688652/49 "2014-06-20T05:34:03Z")
The reason the Canadian Mortgage insurance REQUIRES a down payment is that it shows the new owner has a stake in the house. The deal as presented by the OP - the bank has no way to know if he’s Saint or a Cad - he could just as easily occupy the building and make no payments for months, then skip town. The bank doesn’t know. If the new owner has his own $10,000 or so down payment invested - then he is much less likely to skip on his investment if the going gets tough. [Previous page](https://boards.straightdope.com/t/offering-to-take-over-a-house/688652.md?page=2)