Seeking new tenants to take over mortgage... scam?

[Peepa]

Saw an ad with this statement. Taking over someone else''s mortgage seems almost too good to be true.
Do any of you know how this works?
What to look out for?
Hidden fees?

 

[Tacori E-ring]

DH says do it. Do a proper title search (go to a lawyer). He says you have nothing to lose and these people must be crazy. They will sign their deed (general warranty deed). He said you don't have to pay any closing costs. The seller must be in distress. It's called taking the house subject (2) with existing financing. Totally legal.

What are the terms? Are they asking you for money down? (He says don't).

ETA: He said the people's name will ALWAYS be on the mortgage but YOUR name will be on the deed. B/c it is illegal to "assume" their loan. You have the upper hand.

ETA2: Basically you only have to pay $500 to a lawyer to draw up the deed/title search/etc. If they are behind you will have to pay the late fees to reinstate the loan.

 

[neatfreak]

It could be legit...could be a scam. It very well might be someone looking just to get out of their mortgage without foreclosing. If that''s the case, it could be a great deal assuming YOU can afford it. But make sure it isn''t though an unreputable company. And hire a real estate lawyer to make sure everything is on the up and up before signing anything.

 

[Tacori E-ring]

Oh! DH is going on nonstop now! He said the ONLY way it would be a scam is if they ask for money upfront. If they do walk away. He does find it odd that someone is advertising this and not just renting it out. DH has done many deals like this but he has found the homes not the other way around (if that makes sense).

 

[LitigatorChick]

Really depends. I do a lot of work involving mortgage fraud (ie. catching the bad guys), so please be careful. If in doubt, consult a lawyer.

 

[Deelight]

Sounds like a rent buy system? As in you rent the house for a set period of time i.e 1 year during that time that or some of that money is used towards a deposit on the house. That is the really simple version.

 

[VRBeauty]

Could be someone who''s upside down on their mortgage but doesn''t want to declare bankrupcy or just walk away from their loan, or someone who just decided that they were in over their heads for some reason. My brother used to do creative, totally legitimate buyouts for distressed loans. From a buyer''s perspective, it could provide a way to buy a house without a downpayment.

 

[Dancing Fire]

Date: 6/2/2008 7:55:38 PM
Author:Peepa
Saw an ad with this statement. Taking over someone else''s mortgage seems almost too good to be true.
Do any of you know how this works?
What to look out for?
Hidden fees?

oh yeah?? how many of these homes do you want?

we have plenty of them out here in the Sacto area

do you really want to take over someone else''s $400K mortgage when their house is only worth $300K?

 

[neatfreak]

Date: 6/3/2008 10:46:22 AM
Author: Dancing Fire

Date: 6/2/2008 7:55:38 PM

do you really want to take over someone else''s $400K mortgage when their house is only worth $300K?

Hehe. Good point DF. Make sure you know what you''re getting into!

 

[Tacori E-ring]

DF, I am sure peepa would do the research to make sure she is not overpaying. Or at least I would hope so!

 

[Dancing Fire]

Date: 6/3/2008 11:04:20 AM
Author: neatfreak

Date: 6/3/2008 10:46:22 AM
Author: Dancing Fire

Date: 6/2/2008 7:55:38 PM

do you really want to take over someone else''s $400K mortgage when their house is only worth $300K?

Hehe. Good point DF. Make sure you know what you''re getting into!

infact, a friend offer me to just take over his mortgage. he was of those no dp buyers during the housing bubble......i was LMAO

 

[moremoremore]

So I guess you're buying a house! Congrats...I guess banks are doing assumptions these days..not a lot of banks were doing them in the past...they had no reason to really....

I guess it's better and easier than foreclosure for the bank...

What you DON"T want to do here is some willy nilly informal assumption...the bank MUST approve it....they could be in breach by transfering title to you and doing it....in the long run, it might cost you a house....you need to do a FORMAL assumption with their original lender involved...lenders are not required to accept assumptions....that said, it can be a cool thing...

This is the scoop:

It's called an assumption of mortgage....and likely you'll be signing an Assumption of Mortgage with Novation (they are totally off the hook)...the Assumption doc is what will match up to the new deed in your names...it's not a scam....you'll still have to qualify with the bank (they aren't going to permit just anyone to assume their mortgage...they still want to make sure you can pay and the bank will require a title search...it's really not a scam or scary thing at all...in fact, if your state charges mortgage tax (like NY charges you an actual tax on the money you're borrowing...scam LOL)....you won't be paying any which is a greast savings...you'll still need a bank attorney and possible you're own...

the bottom line is that it's a real sale with a real contract and real deed with real attorneys haha .... the only thing different will be the security insturment...there will be no new mortgage and only the Assumption and most definitely a new Note in your names...(alhtough I'm not 100% here...I doubt they assign the Note and that it's part of the Assumption)

Best of luck!

 

[Lynnchee]

Taking over someone elses mortgage is not unheard of. We did that for our house. We were barely able to make payments on our mortgage. We asked a friend, who was looking to buy a house, if he would just take over our mortgage. We had to get our lawyer to do some paperwork and switch the names out. It took a couple of weeks and we had to pay some lawyer fees. No closing cost though.

We lose out on the money we already put into the house, and we lose out on the equity. But we were desperate to get the mortgage off our hands. Since we were the ones selling the house, we got the lawyer.

I don't think it would hurt to talk to the person selling the house and get a feel if the offer is real or not. Intuition.

Some companies offer a rent to own deal. They screen the credidibility and credit of potential renters for you. They set the price of rent depending on the specs of the area, and will cover the difference if there is one between the rent and actual mortgage. Depending on the value of your home and the specs in your area, it takes about 6 months to a year til the house is finally off your name and the renters own it. The company profits by keeping the equity of the home.

ETA: That's it moremoremore! Assumption. I forget what it was called. And, yes, we had to contact our original lender to see if it was OK, and he spoke to the bank for us. Then we got our lawyer and it was done.

 

[MichelleCarmen]

When my husband and I began searching for a condo, I found a few homes for sale that later became rent-to-own after the sellers weren''t having any luck. Those seem like the safest deal, IMO. It''s a seller looking for last-chance hope in not going into foreclosure. The only down-side is often the seller wants huge montly and if you later change you''re mind, you''ve wasted quite a bit of money. One home nearby us was up for $2,700 and another was $3000+ month, and both required money down - which you also loose if you change you''re mind.