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Mortgage  Question?
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What is a subject to mortgage?

I am considering doing a "Subject To" mortgage with a friend. Is it possible that he signs the deed over to me and I become the new owner? What are the steps involved in doing a "Subject To" mortgage and what parties are involved?

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

Most mortgages have an alienation clause that allows the lender to foreclose on the mortgage in the event that ownership of the property is transferred without lender approval.

A potential alternative you could explore is to acquire a 99% interest in the property with the current property owner retaining a 1% interest. You would set up a joint bank account with the current property owner from which the mortgage would be paid. With this approach you may avoid triggering the alienation clause because the current property owner maintains an ownership interest in the property. You could accomplish the transfer the 99% ownership interest from the current property owner to you through a new grant deed or quitclaim, both of which are handled by a settlement agent (either an escrow company or attorney depending on where you live). Our recommendation is that you consult with an experienced real estate attorney to guide you through the process.

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About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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