Seller Financing fraud? How to help the owner/Seller


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  • What would you do?

    Found a desperate seller “A” trying to make 10k off her house she had been behind on 2 months of mortgage payments in September, 2018, and was going through a divorce. Told her to walk away, since she had over bought, mortgage was a year old, and there was no equity, so it would not be worth any investor’s while to take it on. She refused, but now is back agreeing to do so with a $1500 walk-away deal. Foreclosure is set for March.

    The Numbers:
    Bought for: $77.4k (somehow thinks she bought for $89k)
    Down payment: $6k
    Owner financed note: $71.4k @10% for 12 years
    Loan origination date: September,2017
    In September, 2018, the mortgage paper owner informed the owner of her new payments in the amount of $1189 PITI, from her regular payment of $850 PITI.

    Now also have started the foreclosure process.

    The area is in a major transition, with new brick houses being built all around it, and selling anywhere from $165k-$180k. She bought he house as is, and put in a little money to make it livable spending her savings.

    Her almost ex is in prison for trying to kill her, has an invalid child, and has been diagnosed with some neural disease.

    Mortgage company has refused to furnish with a copy of the loan papers, or the Closing statement, and is stating the payoff amount is around $88,000.

    The payoff amount statement states the Principal Balance left is $69.5k, interest of $3.5k, and some negative TRUST BALANCE, whatever that is, bringing the sum total to $88k as payoff. Remember the original loan was for $71.4k

    IMHO, “mortgage fraud for profit” has occurred, and the unscrupulous, and greedy investor is trying to milk it, and just wants the property back since the values are going up.

    So what would you do – help out the owner/Seller with the $1500 she wants now, and also getting the loan payoff adjusted to the correct amount, and sell it ASAP?

    I would refer her to a good real estate attorney who can stop the foreclosure sale and straighten out the mess.

    You can get an OPTION, and record it, to help her AFTER the mess is straightened out.

    Thank you, Jackie. That is what I was Intending to do – refer her out to a real estate attorney, and get an option on it before doing so with a a clean title being a condition. Also will have to deal with the almost-ex husband.

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    Ayesha, I think your sniffer is a very accurate one regarding that “IMHO, “mortgage fraud for profit” has occurred, and the unscrupulous, and greedy investor is trying to milk it, and just wants the property back since the values are going up.”

    After all, our newest Secretary of the US Treasury got away with fraudulently foreclosing on hundreds of homeowners while he was CEO of OneWest in California. It was by illegally back-dating mortgage documents. The penalties for TBTF (too big to fail) organizations seem nonexistent.

    With your lady owner in financial distress, she may well need a competent attorney willing to take on that mortgage scamming company — probably on contingency. That probably needs to be part of her attorney shopping criteria. If it happens that such a threat is sufficient to get those documents released, that’s all the better. If you are able to help her with that shopping process, so much the better — given your real estate experience.

    I’m thinking that when you structure that proposed option (given the apparent value skyrocketing of the property value in that area), that you work out some kind of split so that your lady gets part of the option gain if or when it’s exercised, and you get part of that gain. I can’t say where those percentages should be set, but honorable real estate business is not just for profit only. There are issues of humanity, kindness, and fairness as well — very unlike that disgusting mortgage firm that sees only the dollars to steal.

    –Dee

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