I came across a deal in PA which I'm not sure about. The gentleman is about to go belly up and the bank is ready to take the property. He had govt. grants which help him out with the mortgage. The realtor said I could simply take over he's mortgage (under his name) but have the title (ownership) of the house under my name and still take advantage of the grants. Is this possible? I just wanted to find out if it's legal and if there is a possibility that I would have to pay the grants back. I didn't want to contact a lawyer until I had a basic understanding and thought this would be a good place to start.

Thank You

I believe that your Realtor is incorrect. All newer mortgages have a "due on sale" clause. While it is possible that the transfer of the property might not come to the attention of the lender, it is not a chance that I would take. Some mortgages may be assumed by a subsequent mortgagor if they qualify for the loan. Many government programs that provide down payment assistance to borrowers have limitations on the borrower's income and are only for first time buyers (no home ownership in previous 3 years). Ask to see the current owner's loan papers, or contact the lender to see what is allowed, and what is not. I hope that this answers your question.

Hi,
I, too, believe the realtor is just trying to sell a house.
I wouldn't assume any mortgage, leaving it in another's name, unless a lawyer told me it's OK.

Thank you very much for your input.

Most of the grants do not allow for sale of the house and do not allow for someone to assume the loans.

I am thinking what the realitor wants to do, is let the current owner give you a quick claim deed to his right to the property, but not report the sale to the mortgage company but merely let you keep paying them under this mans name. Since any lien not cleared up at transfer of property stays valid, the quick claim deed would not make the lien invalid.

So after you paid off the loan, they would send the previouis owner a paid off deed of trust to the property ( to you really since they would send it to your address( when this is recorded it shows that the loan is paid off.
Then with your recored quick claim deed, you would own the property clear.

Problems, explaining if you try to sell the house how you had a quick claim deed prior to the paid deed filed. May cause a new buyer to have concern. If the loan company figures this out, it most likely violates loan agreement and can cause them to declare loan in default,

If the loan is not "assumable" meaning that they put your name on the loan,

Also property like this is often sold by "contract for deed" you are not actually given a deed, just a contract which says when you pay off this certain amount you will be given a clear deed. While I have bought properties like this, there is a lot of issues there, if you pay it off, but there is a lien by the original owner still on the house, you can sue but that is about it if they don't have the money to clear it up

Some loans are assumable, but they do not stay in the prior owners name.. you just assume the terms.. I would not listen to the realtor either..
If title is just switched to your name, technically you will probably activate the due on sale clause.. be very cautious!