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Thread: What's the deal with this?

  1. #1
    Peanut_Butter
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    Default What's the deal with this?

    I've been looking for apartments on craiglist and I see tons of ads to "take over payments" on distressed homes. bad credit is ok. Bank is foreclosing soon and this company helps you to get the deed transfered into your name and all you do is take over the mortgage payments. No down payment. bad credit ok. You pay off remaining balance on home to stop it from going into foreclosure. Here is one such ad:


    Now..this sounds awfully scammy to me. To good to be true kind of thing.... Does anyone know how this works or if it really is just a scam?

  2. #2
    Veteran Member MissDewdrop's Avatar
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    Default Re: What's the deal with this?

    I'm not sure if it's a scam or not, but you can search at ripoffreport.com using keywords to see if anyone else has posted.

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    God/dess virgoamm's Avatar
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    Default Re: What's the deal with this?

    That almost sounds too good to be true. I hope it's legit-if so that would be friggin' awesome. That's probably the only way I could even get a house right now until I fix my credit.

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    Default Re: What's the deal with this?

    I don't know if this is the same thing, but there is a scam where they transfer the loan to your name but keep the title in their name. This means you're on the hook for the mortgage but don't own the house.

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    Banned Melonie's Avatar
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    Default Re: What's the deal with this?

    the deciding factors on whether this is 'too good to be true' or not boils down to two questions ...

    Does the outstanding balance of the existing mortgage which would be 'taken over' represent a larger number of dollars than the property is currently worth on the open market ? This represents a major risk factors in 'hot' real estate markets where the soon to be foreclosed on home buyer may have paid top dollar 2-3 years ago, but where current real estate resale prices have fallen 10-15-20% from those levels.

    Do the terms / interest rate of the existing mortgage which would be 'taken over' represent a fair value in comparison to the terms / interest rate available on a newly written mortgage ? This can also represent a major risk factor if pre-payment penalties, uncapped variable interest rates, negative amortization recoveries etc. were part of the original mortgage.

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    God/dess VenusGoddess's Avatar
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    Default Re: What's the deal with this?

    Well, that certainly doesn't sound like a deal. You'll notice it says that you pay for the payments to bring the loan current. For MOST foreclosures (in this day and age) the house can be as much as 6-12 months behind payments. That does not include taxes.

    Any place that says they'll have the "deed" transferred into your name and you just take over the payments, I wouldn't give a second thought. There are too many holes left open with those scenarios. You either buy the home or you don't. If you don't have the credit to buy the home, you shouldn't try to get a home this way. There are just too many ways to get screwed.

  7. #7
    Peanut_Butter
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    Default Re: What's the deal with this?

    well, I found the answer, in case any one else is interested:

    The process of buying a home and taking over a loan in another person’s name is commonly referred to as buying a property “subject to.” In such a transaction, the title of the property transfers to the new owner, but the loan remains in the seller’s name. Lending institutions frown on buying properties “subject to” and include a due on sale clause stating the lender can call the loan due upon a transfer of title. In practice, lenders rarely enforce a due on sale clause and are more interested in receiving timely payments then enforcing calling the loan due. Selling “subject to” is not without risks to the seller since the loan remains in their name and if payments are not made their credit can be affected at a later date. The benefits for the investor are acquiring a property with little money out-of-pocket, no loan costs or appraisal fees, and their credit is not affected or put at risk by the loan they are taking “subject to.” This is a powerful investing strategy unknown to most investors and one that should be used by ethical individuals. Like many powerful tools, it has the ability to be used for good or bad depending on the individual. When purchasing “subject to” there are documents that must be signed for the protection and understanding of all involved.


    So it's not a scam, per say..it's just very risky.

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    God/dess cutey5032's Avatar
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    Default Re: What's the deal with this?

    deleted
    Last edited by cutey5032; 10-15-2008 at 10:01 AM.

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