Real Estate Investing Blog

Most mortgages today do have a “due on sale” clause .

The term “due-on-sale” means a contract provision which authorizes a lender, at its option, to declare due and payable sums secured by the lender’s security instrument, if all or any part of the property, or an interest therein, securing the real property loan is sold or transferred without the lender’s prior written consent;

Legal jargon that says plain and simple - a right to call the entire balance of the loan due.

But do they??

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REO Question:

Dear Michelle,Thank you for this email. Here is a question I have for you.

Staying in touch with [the] REO [department] at a mortgage company after the [auction at the] court house steps could work to secure a property before it goes to a local realtor[, Right?].

In NC, the price jumps 5% with each bid after the courthouse steps. From your experience, can one contact a mortgage company immediately after the bid reinstatement period with a lower bid–one closer to the amount for which the bank took back the property, thereby cutting off the 5% jump in price.

(This assumes there have been no bids save for the bank’s on the property.)

Michelle’s Response:

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