Wholesaling Subject-To Deals in New York

The short answer

Can you wholesale a subject-to deal in New York?

Sometimes. You can generally contract to buy subject to an existing loan and assign that contract, but the lender may be able to demand full payment, and New York protects owners who are behind. Have a New York attorney draft the paperwork before you promise anything to the seller.

In a subject-to purchase the loan stays in the seller’s name while you or your buyer take title and make the payments. Our subject-to guide covers the basics. The federal Garn-St Germain Act allows lenders to call a loan after a transfer, so the risk is real even though payments keep arriving.

Our research found no New York state law that bans subject-to deals, but we did not review every rule. Read about the due-on-sale clause, and ask whether your buyer can handle a call. A deal where the owner is behind on payments adds more rules, covered below.

The opportunity

Why subject-to talks happen around Yonkers

Westchester homeowners carry large mortgages and heavy property tax bills, and many bought or refinanced when rates were low. When life changes, those owners dislike giving up a cheap loan. Getty Square, Park Hill and Crestwood all have owners who fall behind after a job loss or an illness. A buyer who can take over payments offers a quick exit that avoids an auction. That story needs care. The better the old rate, the more a buyer wants it, and the more the lender may want it back. Learn to explain both sides, and use our motivated seller guide to qualify people before you quote terms.

Lead sources

Where to find subject-to leads in Yonkers

• Pre-foreclosure filings. Check county clerk records for notices of pendency. Our lis pendens guide explains them.
• Mail to owners. A short, kind yellow letter reaches owners who are behind.
• Skip tracing. Find phone numbers with skip tracing, and respect the do-not-call rules before you dial.
• Attorney and counselor referrals. Housing counselors and foreclosure defense lawyers meet owners who want options.
• Landlord groups. Small landlords sometimes want to hand off a building and keep their credit clean.

Your exit

Who takes over subject-to deals in New York

Buyers are usually investors or owner-occupants who value the existing rate and can pay a down payment or fee. Many prefer lower monthly payments over a big up-front check.

Tell the buyer about the lender’s right to call the loan in plain words. A buyer with cash reserves or a refinance plan sleeps better. Our creative financing guide shows other ways to structure a deal.

Step by step

How to start wholesaling subject-to deals in New York

1. Check the loan. Get the mortgage statement, the rate and any escrow details from the owner.
2. Find out the status. Ask whether payments are current. A default changes which rules apply.
3. Run the numbers. Use the MAO calculator and the ARV calculator against the loan balance.
4. Hire an attorney. Use a New York attorney from day one. See our attorney guide.
5. Disclose. Tell the seller you intend to assign, and tell the buyer the loan terms in writing.
6. Get a payoff statement. Request a payoff statement with the seller’s written consent.
7. Close and set up servicing. Plan for insurance, escrow payments and who pays if the lender calls the loan.

A Crestwood homeowner lost hours at work and fell three months behind on a loan balance of $402,000. She did not want an auction. Her payment was about $2,380 a month, far lower than rates available today.

You agreed on a contract subject to the loan, with the buyer catching up the missed payments. You talked to an attorney, learned that her situation might fall under RPL 265-a, and used a contract with the required notice language and a cancellation window. You also told her in writing that the lender could call the loan.

An investor paid you a $15,000 fee, brought the loan current and took over payments. The owner kept her credit from sinking further and moved to a rental in Westchester.

New York rules to know

Lender, foreclosure and equity-purchaser rules

New York Real Property Law section 265-a covers equity purchasers of one-to-four family homes when the seller lives there and is in foreclosure or default. It brings a cancellation period through the 14th business day, a two-year voidability window and a possible $25,000 Attorney General penalty per violation. Subject-to deals with a late owner are a prime example, so treat that seller as covered and check current text.

Two other rules matter. RPAPL 1304 requires a 90-day notice before a lender starts most home loan foreclosures, and CPLR 3408 sets a settlement conference within 60 days after proof of service. Both can slow a case and open choices for the owner. See our Chapter 13 note and deed in lieu guide for alternatives.

Learn it with a mentor

Work through the lender risk first

Subject-to deals can go wrong when the lender calls the loan. Mentorship students show us their plans, and we help them think through insurance, reserves and the exit.

FAQ

Subject-To Deals in New York: common questions

Keep going

More New York wholesaling guides

Read the full New York wholesaling guide or pick another situation below.

Guides that go deeper