Morby Method, Subject-To and Gator Funding: Differences

The Morby method, subject-to purchases and gator funding appear together in creative-finance conversations, but the names are not interchangeable loan approvals. Pace Morby’s own introductory material lists the Morby method, subject-to contracts and seller financing separately. For a funding request, move beyond the name and identify each obligation in the proposed deal.

Separate the purchase structure from the cash need

Subject-to describes acquiring property with existing financing remaining in place rather than simply paying off that financing through an ordinary new purchase loan. It should not be confused with a lender-approved assumption or a release of the original borrower. Seller financing describes a seller accepting a financing obligation as part of the sale. A proposed new senior loan is another distinct component.

If someone describes a Morby-method transaction involving a new loan and seller-carried financing, ask for that precise structure in writing. Do not assume that all uses of the phrase refer to the same loan percentages, lien positions or repayment schedule. A general creative-finance example does not establish that a proposed lender accepts subordinate debt or the intended source of funds.

Where EMD or gator money may enter the discussion

A deposit or other short-term cash need can arise within a larger purchase plan. Funding that need does not validate the rest of the structure. The parties still need to resolve purchase financing, existing obligations, seller financing, settlement instructions and repayment of any short-term advance.

Ask when and from what source the short-term money will be repaid. A property intended for a long hold cannot be described as a same-day double close merely because one part of the capital is needed briefly. Rental income, refinance proceeds and a contracted resale are different repayment assumptions.

Do not treat a transfer as lender consent

Federal law addresses enforcement of due-on-sale clauses and specified protected transfers. Do not assume a transaction qualifies for an exception or that making the payments removes the issue. Have a qualified attorney review the actual loan documents and proposed transfer, and resolve any required lender consent.

Also identify who remains liable, who services each obligation, what insurance is required and how taxes and other property costs are handled. These are transaction questions. A course testimonial or a claimed success rate does not answer them for your seller or buyer.

Build a funding summary without shorthand

• State how title is proposed to transfer and which existing debts remain.
• Identify every new loan or seller-financing obligation and proposed lien position.
• Separate the contract deposit from the purchase and holding costs.
• Identify repayment sources, dates and outstanding approvals for each advance.
• Have the settlement and legal professionals review the same complete structure.

This is a terminology and preparation guide, not a course review, an affiliation claim or a recommendation to use a particular structure. For a defined deposit request, start with EMD funding. For an immediate purchase and resale, see transactional funding and explain every other proposed financing component.