What is the purpose of being placed on the title of a house that will eventually go through foreclosure?
Question:
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I just "discovered" that.. but I don't understand what he's trying to do. Surely it's not legal or safe, right?
Answer:
No matter who is on the title the bank still has an interest until the mortgage is paid off.
That poster has no intention of keeping the house or loan or if he/she/it does it will rent out the property possibly even back to the poor unsuspecting owner.
You do not just go down to the courst house and record a quit claim (which is what he/she/it will get from the property owner) and suddenly the banks interest disappear.
ADDED:
"It also must come with a ton of dislosures for the homeowner to sign."
Not with the slicksters it doesn't, you will not even know what hit you they are so slick.
And yes it is wrong because if it were legit the bank would be notified and the name on the mortgage would be changed etc. That "don't" happen!
It's called a wrap mortgage
That is a very risky move only practiced by very, very experienced investors and is not for the average rookie without a ton of bankroll.
I know people that have made a fortune off of the process, but if you don't know what you are doing, and you are not THOROUGHLY familiar with the entire mortgage process from title, to deed, to mortgage.you don't need to touch it.
Yes, it's a perfectly legal process. It's a way for an investor to get ahold of the property to legally have control over selling it...the reason that it's legal is because the owner is voluntarily giving up control of the property, and the mortgagee is collecting their full fee...so no one is getting defrauded in the process.
It also must come with a ton of dislosures for the homeowner to sign.
I cannot emphasize enough that this is ONLY for very, very experienced investors.
If you acquire title from an individual that is in the process of losing the property all that you are doing is two fold.
1.) you are in a race to sell the property for more than what the bank is owed to be able to pay the mortgage off before foreclosure.
2.) you are added to the list of persons who's interest will need to be eliminated at the foreclosure lawsuit if you do not pay off the loan before the foreclosure.
Don't go on the house. You will have tax implications and the foreclosure will follow you for years. Bad, bad idea.
There's really no purpose, and the big loophole is if the house does go into foreclosure. Once the bank sells the house at a sheriff sale, anyone can bid on the house, and the high bidder becomes the new owner. Whether your on the title or not at that point doesn't matter, because the house is sold, title is transferred, and the owner will be able to begin the eviction process.
The other link you provided does describe a legal process, although not a smart one. Here's what he seems to be trying to do:
1. He'll pay the defaulted amount on the house, brining the loan out of foreclosure into a current status.
2. For doing this, he'll take ownership of the property, but the mortgage will still be the responsibility of the original owners.
3. He's betting the bank does not call the loan due because ownership transferred (due on sale clause).
4. He may sell the property at a gain some time later on, paying off the mortgage, evicting the tenants (who used to be the owners), etc. Or he may let them have the house back after they pay him back the amount he gave them to get out of foreclosure.
It's legal, but he's taking some bets there that have no sure results. And hopefully the homeowners understand that they'll be tenants in the house now, since they are transferring ownership. They'll still be responsible for the mortgage, since they got that when the were owners of the property.
Hope that answers your question.
ForeclosureFish
http://www.foreclosurefish.com/...
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