Definition
In a subject-to deal, the buyer takes ownership of your home while your existing mortgage stays in your name and continues to be paid, usually by the new owner. It can help a homeowner who's behind on payments and short on equity get out from under a difficult property quickly, without needing to qualify a buyer for a new loan. The real catch is that the mortgage remains your legal obligation and shows up on your credit report, and the lender technically has the right to call the loan due once it discovers the transfer. Anyone considering this route should fully understand the risk before signing anything.
Example
James fell three payments behind on his mortgage with almost no equity built up in the home, and a formal foreclosure notice had already landed in his mailbox. He deeded the property to a buyer who agreed to bring the loan current and continue making payments going forward while the mortgage stayed in James's name. It stopped the foreclosure clock almost immediately, giving James breathing room he desperately needed, though he stayed in close contact with the buyer to confirm payments kept being made on time. He also asked that payments run through a licensed loan servicer so he'd get monthly confirmation the mortgage was staying current instead of just trusting the buyer's word. Eighteen months later the arrangement was still working, and James's credit had recovered since the loan showed as current rather than delinquent. He knew the lender could technically call the loan due at any point, but he felt the risk was worth avoiding a completed foreclosure on his record.