Scam or Not – Experienced opinions please?

Question by 321: Scam or Not – Experienced opinions please?
Scenario:
Foreclosure is imminent; Non-Judicial state (California). The homeowner has run out of options (short sale, deed in lieu, etc.) and is prepared to walk away.

They respond to a road sign that says “we buy houses”.
The company represents that they will “buy” the house in an attempt to sell it to a 3rd party or private investor.

To do so it requires the owner to sign over title. No promises are made that they will be able to sell the house and no promise is made that the owner will in any way be able to regain title. Unlike equity skimming scams, the intent is not for the owner to rent or lease the property and regain title later. Disclosure is made that any equity in the home will be lost and the only goal in the transaction is to avoid a foreclosure on the credit of the owner. Even that is explained that it is not a guarantee that this will occur and it is up to the owner to dilligently communicate with the credit credit bureaus.
While title is transferred the loan remains in the name of the original owner and they are still responsible for the debt.

If indeed a 3rd party buyer is found they would bring the loan current and refinance the existing mortgage into their name. They would benefit from the equity less a fee to the company that “brokered” the transaction.

No payments are being made on the property and this is also disclosed and if the house is not sold it will be foreclosed upon by the lender as was originally planned.

Question: Is this legal? It would seem legit and a last ditch effort buy the homeowner, not to save their house, but their credit. No fee is charged to the homeowner and everything is disclosed in writing.

Experienced opinions please and rationale for the opinions would be appreciated.
Once again, this is sort of a last ditch roll of the dice. The worst that can happen is that the house gets foreclosed anyway. The buyer is prepared to walk. The best that can happen is that a buyer is found and the mortgage transferred to another name thus preventing a foreclosure on the owners record. Can anyone comment specifically on this scenario as I described it?

Best answer:

Answer by She-Nerd
Sounds scammy to me.
If you sign over the title but are still responsible for the loan, seems to me that you have no recourse at all. They’re only as good as their word that they’ll bail you out, and how good is that?
Check them out with the local better business bureau. Check with a local lawyer if you can, as laws vary in different places.
Be wary of anyone who wants your money right away on a “this deal won’t wait” basis.

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6 Comments/Reviews

  • Norma is Nice :) says:

    THIS IS CLASSIC. NOT A GOOD IDEA. DO NOT DO IT. BASICALLY, AS MENTIONED IN OTHER PEOPLES STATEMENTS. WHAT THEY DO IS RENT THE HOME OR COLLECT AN UPFRONT FEE. THEY’LL USUALLY PAY YOU SOME PITIFUL CASH UP FRONT IF ANY. OR MAYBE NEVER. NEVER SIGN OVER YOUR TITLE. just because you sign over the title doesn’t relieve your responsibility to PAY PAY PAY what you owe the lender. the NOTE to your loan superciedes anything else when it comes to the money you owe. BETTER get a short sale, an experienced SHORT SALE or FORECLOSURE r/e/mortgage office. Don’t get any realtor. 90% are too new to know anything about foreclosure process.. the ones who know usually worked on them back in the 80’s… if they want to stay in the home but are too backed up and do have some money.. and can afford to make a payment VERY CLOSE to what they had maybe even a few bucks higher.. ask for a loan modification. CALL HUD or your local city hall.. they usually have contacts for your to call. DON’T GO WITH THE PEOPLE WHO DOOR KNOCK AND NEVER PAY ANY MONEY to people who promise!!!! If this is in CA… I’ll give you advice for FREE. I don’t do this for a living anymore but I used to… I won’t do the whole process but I can at least tell you if someone is trying to rip you off. I won’t ask for personal info or anything like that.

    ONE LINE OF ADVICE.. talk to people about it.. go with a mortgage professional that SOMEONE knows… not ones that just come up out of know where. Sometimes you have to pay a little to get someone you trust… or at least someone trusts. better that then to be embarressed and not tell anyone and end up in an even worse situation. No one is going to look out for your best interest better than you.. essp when it comes to money.

  • lenderjayne says:

    What about a hard money loan to tide you over until you can sell the house. If you have any equity in the property, increase the commission to the selling agent to 5-6% to motivate realtors to show the house. It has been working in our area here in CA.

    Now about that company, why would you give up equity to someone else???? Why would they take it from you if you can’t sell it. Scam, don’t do it. Your credit is still affected regardless.

    Email me with any questions you have I’d be happy to try and help you through this.

    CA Lender

  • bostonianinmo says:

    It’s equity skimming, pure and simple. Been there, done that, in Cali. Same exact deal. Home was rented out for about 5 months before the foreclosure went through. Nothing was ever paid on the loan and there is no evidence that any effort was ever made to locate a buyer.

    FYI, even though Cali is a non-recourse state, if it’s a government-backed loan such as FHA or VA, the Feds will come after the original mortgage holder!

  • godged says:

    The owner won’t be able to sign over title, because the lender technically owns the house.

    This scam is total crap at that point.

  • Etta P says:

    This doesn’t actually relieve the current owner from being foreclosed upon. Most mortgages have a “due at transfer” clause so this can actually expedite the foreclosure process. Keep in mind that there has to be a way this company makes its income, that would be only if the property has sufficient equity to attract a private party to buy. They may even elect to bring the mortgage current to allow more time and keep the transfer a secret from the lender. In the meantime, the current owners credit report most likely already has the following comment: “foreclosure proceedings has begun” and this will adversly effect the owners credit for many years. This is not amount of “dilligent” communication to the bureaus that can change that. I wonder if the current owner has attempted to file for bankruptcy which would perhaps put a stay (stop) the foreclosure long enough to sell. That company can only make money if the property has alot of equity, cant be in it just to save the credit of a perfect stranger, cant pay the light bill with that.

  • Kyle C says:

    buy something else

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