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Investors are everywhere when you are trying to avoid foreclosure. Foreclosure hunters, as they are called, are just waiting to pounce.
Be very careful.
They could be someone with real knowledge of the real estate world but instead of using their powers for good they use them for evil.
Or…they could be someone who just watches too much late night TV. After purchasing a package or attending, they think they know everything there is to know about foreclosure.
One thing you do know for sure is they are not there to help you. They are there to make money. Telling you they can help stop foreclosure is how they get in the door.
Let me explain some of the techniques these investors or foreclosure hunters use. It depends on how much equity you have. If you have 20% or more equity in your home, usually this is the technique they use. First, they say you can stay in the house. This seems to be a real selling point for people trying to stop foreclosure. Second, they say they will pay your back payments and bring you current on your mortgage. All you have to do is sign all these papers…..one of them being a Quit Claim Deed giving ownership interest of your home to the investor. Another is a rental agreement making you their tenant.
The goal of the investor is to get you out of the home as soon as possible. “But they just told me I could stay.” That is how they got you to agree to all of this. People trying to stop foreclosure are so stressed out that they just want someone to tell them everything is going to be ok. Unfortunately, I used to work for someone who used this technique so I know of what I speak. I have seen it first hand. The really weird thing is many times another foreclosure hunter would get to the homeowner and they would sign that investor’s Quit Claim Deed too. It was a game between the investors to see who could be the last one to record their deed at the county before the sale date.
Let’s get back to the technique. After you sign the paperwork, you will find that in there somewhere the investor reserves the right to change your monthly rent payment. Their goal is to broadside you with a payment you cannot afford. Once you default on that payment, they use their rights as a landlord to evict you from the home. Sometimes people were evicted before the investor had even paid the back payments….so they weren’t out any money at all! The investor immediately sells your property and pockets your equity. Keep in mind, judges hate these investors. If any of these people would have shown up to court during the eviction process they probably would not have lost their homes. The judges try to keep tenants in the homes as much as possible and that goes not only for investors but any landlord.
What if you are trying to stop foreclosure but you have no or little equity in your home? Unfortunately, these foreclosure hunters or investors have a spin on that too. If you have no equity and you are already down more than 2 payments there is really nothing anyone can do. But, watch out for anyone who says they can. This is what could potentially happen. In these situations, the investor will not tell you that you can stay in the house. You will always have to leave. They have you sign a lease option or a real estate contract “subject to” the mortgages. Either way they just want control of the property but you have to remember you are still responsible for the mortgage(s). Now here is where the real scum come in. Like I said before if you are more than 2 payments down with no equity…be careful. After these investors gain control of the property, they will put another party in the home. The new renters will sign a lease option or rent to own document. The investor will ask for a sizable amount down and usually a higher than market rent amount. After they get the down payment from the new tenants, they disappear. Your mortgage never gets paid which they promised to do and now there is someone else living in your home and you don’t even have the right to evict them anymore. You were trying to stop foreclosure and you ended up being foreclosed on anyway.
This doesn’t mean that if you are not 2 payments down yet it couldn’t happen to you. I am just saying it is a 99.9% chance it will happen in the above scenario. These investors are taught by the late night infomercials that you try to get to people before they are more than 2 payments down. They also know that if something goes wrong and they need the money coming in from the new tenants to pay that gambling debt of theirs, they have no problem skipping out on you and leaving you facing foreclosure again.
Another thing to be concerned about is the lender. When you sign a mortgage note, there is a clause in there that states you will not transfer title and/or equitable interest to the property. Technically when you sign a lease option you are giving equitable interest in the property. The lender has every right at that moment to call the note due and payable.
Be aware of any “investor” out there. Also, be aware of commercials, ads, or websites that say they can help stop foreclosure. Most of the time, they are just lead generating machines for these horrible investors.
If anyone proposes any of the things I have described above run like your hair is on fire!
Good Luck!
Rob K. Blake, author of the book Mortgage Secrets Exposed! and host of The Mortgage Insiders Show, has been teaching folks for the last 15 years all the tips and tactics to save $1,000s when shopping for a mortgage. For more home loan tips, Visit his website at www.themortgageinsider.net . |
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