Recently there has been an ugly turn in the foreclosure market.Most people are familiar with the foreclosure victim who is a homeowner that fell on hard times and is forced into foreclosure, or when a homeowner has re-financed his home and "cashed out" his equity, and stops making his mortgage payments.In effect, he has sold his home to his lender.Lately there is a third entry in the foreclosure arena.
The new foreclosures are investors who are unable to make payments on speculative real estate purchases but decide to rent or lease option the property to help offset the financial loss.This group of investors is actively renting or leasing their properties knowing they are going into foreclosure and are keeping the rent payments as a profit source.
The strategy of renting a property, even if the income doesn't cover the mortgage, is used to offset carrying costs on a property until it can be sold.In the recently declining real estate markets, price declines have more than offset hope for a swift turnaround.Investors are faced with continuing financial losses, or selling and taking a loss.But if no sales are taking place, going into foreclosure is the only option.
The problem is that some investors are renting their properties and are not paying their mortgages.In even worse situations, some investors are lease-optioning the homes to tenants who are paying substantial "option considerations" for the privilege of purchasing the home in the future at a preset price.When the lenders foreclose, the tenants will be evicted with no chance of recovering their deposit, last month's rent, or option considerations except by legal action.
The investor who rented the home has legal liability to the homeowner, to the state's attorney, and to the lender for fraudulently carrying on a practice called "equity stripping".The investor may feel he has no liability because he may have purposely put the property's title in an LLC, corporation, or even a land trust.However, his fraud nullifies any attempts to cover his tracks.Even the new bankruptcy laws preclude the inclusion of fraudulent items such as when equity stripping is involved.
Renters must take legal action to recover any lost funds and get compensation for their moving expenses.Renters should contact an attorney who is familiar with tenant/landlord law as soon as they have any indication of a foreclosure. This notification usually comes in the form of a summons from the county court.
When lease optioning a property, make the mortgage payment directly to the lender, and make a second check to the property owner for any amount over the mortgage.If the rent is less than the mortgage payment, a foreclosure could be a real possibility.To determine how much risk a property has, ask the landlord to see his mortgage coupon book or monthly statement.Next, check with the county clerk to see if any other mortgages exist against the property.Finally, proceed with the lease option only if you are certain that all the liens against the property have been disclosed and your rent covers them.
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Credit Repair?
By: blbutterfly77 | 03-09-2008
who works for transunion or experian. i need help
How have annunities varied in last ten years
By: babyboomer | 01-09-2008
how have annunities varied in last ten years
If i use my checkbook ira to loan money to a ...
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if i use my checkbook ira to loan money to a friend or sibling how much interest am i required to charge
We are not behind yet on mortgage payments, but ...
By: mary | 30-08-2008
we are not behind yet on mortgage payments, but don't have food money hardly for month, and with me on social security and now diagnosed with liver and colon cancer, and if my husband has to loose money by staying with me, during chemo, etc-need some help somewhere
Filing Ch. 7 & Foreclosure
By: Sandra | 29-08-2008
I recently filed Ch. 7 which has now been discharged. At the time when I first started proceedings with Ch. 7, I had intentions of keeping my home. But since my discharge, I am finding it difficult to keep up with my 1st mortgage, 2nd mortgage and HELC. I am now one month behind in my mortgage payment and two months behind on my HELC. What I am interested in knowing is once a home goes into foreclosure, will I be held liable for the unpaid debt of my 1st, 2nd and HELC or am I protected under the bankruptcy law since I didn't sign a reaffirmation during bankruptcy.
Want to know how to stop foreclosure??
By: Adalia Dustin | 29-08-2008
The easy way: go to stop foreclosure : http://www.tostopforeclosure.com Those are REOs. For pre-foreclosure, there are several ways. They include, note buying, short sales, and providing services to those at risks of foreclosure. As to how to do each, that's a bigger lesson than I can post here. You are better off learning which ever method you wish to work with. I run a real estate seminar list. You might find one that suits you. Also, be aware that foreclosure investing is also rehab investing. You will rarely find a foreclosure that doesn't need, at least minor rehab. Especially in today's market when buyers are looking for upgrades.
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