I got a call from a seller who 8 months ago signed his deed over to an investor. The investor paid 6 k to get his back payments current, and then let the former owner rent from them for 1200 a month. The mortgage is 2000 a month. The home owner checked on the mortgage and realized the investor will be 3 months behind on May 15th. He called the investor and the investor wants to sign the house back to the owner, and put a lean back on the property for the money he spent and the 800 a month negative cash flow he had while he owned the house.
Talk about shady investors. It’s scum like him that makes it hard for the good guys like us to do business.
Anyway I told him to call up the board of realtors in Arizona to find out if he is a licenced realtor. If he is, I told him to file a formal complaint and let the real estate rescue fund in Arizona help get him caught back up.
If he calls the bank and tells them that an investor actually now owns the property and has them accelerate the DOS clause what actually happens? Will they ask for the full amount due by a specific time, and if the investor doesn’t pay it, can they foreclose on the investor and not the people that the are actually on the loan?
Thanks
Whoever is on the loan will get the foreclosure. Since that is the original seller and not the investor, it would not be a good idea to try to get the lender to foreclose.
What kind of contract did the seller and investor sign? I assume at least some kind of purchase and sell agreement. That should have spelled out the complete terms of the deal, for example, like the fact that the investor was putting $6K down and taking over the payments. Hardly see how it would even be possible to consider putting a lien against the property for it.
Of course, it was just plan stupid to purchase a $2K/month payment for $6K, then only get $1200/month back, but hey, maybe I just don’t know how to do the new math. Sounds more like a wannabe investor than a scam artist, but who knows. I’d be curious how all this was explained to the seller. I mean, as the seller, I’d have to question someone’s logic on this before committing to anything.
Legally, we’d have to know what was in the contract. Generally speaking, however, I’d say that the seller is in pretty good condition. There is really nothing the investor can do but sign it back over to the seller. If he would try to levy a lien against the property for any amount, then that would mean that he loaned them money, not bought the place. If that’s the case, then either he lied about loaning (did he say it was a loan, disclose terms/etc?) money or he lied about buying it (and since he has title…). Either of which would be some hefty fines and/or jail time. There is no way that he could legally attach any of the $800/month on to anything as I’m sure that that was a completely separate doc (like a lease). Can’t up the monthly on a whim!
If they signed a contract that spelled out that the investor was supposed to make the monthly and keep them current, then they have legal recourse against the investor now. It would be in the investor’s best interest to catch up those payments and move on before he/she loses everything they’ve got.
As to what the sellers need to do, they need to call their mortgage company NOW and try to work out some sort of agreement with them to keep this from foreclosing. I’m assuming that they paid the $1200/month. If that’s correct, then that’s the number I’d start with as a monthly figure to the bank.
The seller needs to speak with an attorney about filing a breach of contract suit against the investor. At the very least, the seller should get the property back plus a judgement against the investor for the past due mortgage payments. Maybe punitive damages, if the case goes to trial.
If the investor collected the payment and did not make the payment to the mortgage company, that could be called equity skimming. Let him talk to a lawyer.
It sounds like the investor is a newbie who though he had a good deal and was banking on appreciation.
Couple of rules
Never lease back to someone in foreclosure
Never lease back to someone in foreclosure with negative cashflow!
The investor did not even have them sign a contract, he just had them sign the quit claim deed.
The seller called me back last night and the investor agreed to sign the house back over, and paid it up current. It sounds like this investor was doing some other shady deals as he is about to be sued.
So the seller owes now 293K and the house is worth approx 320k. Mortgage payments are now 2100 a month, but the first mortgage which is now fixed at 6.99% will go to variable in July.
Could you possibly collect 2100 a month from a lease option tenant with 1200 being rent, and the other 900 being rent credit towards the house payment if they close?
If the tenant/buyer were to buy the house there payments would be over 2000 a month anyway most likey so if they won’t be able to afford that in a year or so, what makes you think they could afford the house?
Not sure if you’re trying to get into this deal or not by the posts.
The answer to your last question is that they can’t afford the house. Should have never put someone in a prop paying $1200/month for a $2500/month home.
If you’re trying to do a sub2 on this prop, then what you want to do is resale at about $330K or so, “finance” $320K at 8%, which would be aprox $2350/month with a 2 year call on your ‘note.’
