An RE investment company bought 2 houses from me subject to existing financing. In the contract I have with this RE company, they agree to make timely payments on the mortgages, HOA fees, etc. They also agree to transfer the mortgage into their name after 6 months or 6 months from date prepay penalty expires. One of the houses loan has NO prepay penalty.
Our agreement was signed on 11/17/06 and recorded 11/21/06. Therefore, if they have not removed my name from the mortgage via selling, refinancing, etc., they will be in default on the contract. They also have been late with the mortgage payments EVERY month. They have not yet made payments for this month (it is now 4/21), and I fear they will not make them before end of month (thus ruining my credit) and may stop making them altogether. They also have not paid all HOA payments.
They are clearly in default of our contract, and I will likely sue them and win eventually. Their company, according to their SEC filings, has many millions of dollars in assets (mostly real estate).
Now my question is this. Is there anything (other than making the payments out of my pocket - which I can’t) I can do to save my credit? If the payments are not paid, foreclosure will begin. With the declining RE market, the houses now have no equity. . . would sell for less than mortgages. Will the bank ask me for the difference in what they sell the houses for after getting it REO, and the amount on the mortgages? Are my other assets (residence, savings, etc.) at risk of being attached by the bank? What happens if I contact the lender L/M department and tell them I sold the properties subject to? If they call the loan due, nobody pays, and foreclosure begins - do they go after the owner of record (company I sold to S2), or do they go after me? Lesson learned for the future, but is there any hope for my situation?
What was your situation BEFORE they took over the properties? Were you about to be behind on payments?
What will happen:
If bank finds out the loan was transfered as such they will foreclose on the property and go after you. You signed your signature on the loan, you lose your credit, the RE company loses the house. Bank goes after YOU for deficiency.
You sue them you can most likely build a case. What is the name of this RE company, I would like to know.
I am wondering why you would go to a REICLUB forum to post this question? Would you not go to your lawyers instead of a forum frequented by investors that do this sort of stuff?
I am part of a group of approximately 20 investors that was victimized by this company. We are meeting tomorrow to discuss our options (including and especially retaining an attorney and going after this company). Before selling the houses to this company, the payments had been made on time. Every investor in our group had and has excellent credit, but it looks like that is about to change.
It will cost money to sue them. At our meeting tomorrow, I may have the task of convincing reluctant fellow investors to contribute money for the lawsuit. I am wondering what we will gain, if anything, by suing and winning. By the time the case is settled, our credit will have already been ruined. Because they are a publicly traded company, I WILL post the name of the company AFTER the lawsuit has been filed.
When you sell sub2, have the buyers presign a deed deeding the property back to you in case of default, like 30 day default or late pay default . Have the title co hold it with default instructions signed by you and buyer.Then all you need is a couple of certified letters to them and you record and take the home back. In you next sub2 sale add verbage to the effect you can void the lease op deal to their TBers if the RE co defaults and add it to the TBers contract. I know, I know , hindsight 20/20, Darin