Forclosure Bailout

[mikemac14u]

How do I help someone who wants to stay in the house?  I've done L/O on foreclosures but the people moved away.  I don't know how to structure it when they stay.  Can anyone help?

[LoriK]

I would really think long and hard about doing this. If the seller is unable to pay their mortgage to the lender, what makes you think it will be different with you?

They may really want to stay in the house, but if they can't afford it, they can't afford it.

[real estate 001]

    i agree if they can not pay for the house  now they can not pay for it through you  AND you could end up as they say on the sh---  end of the stick on the deal not a good idea to let  them stay in any way

[kikaider69]

OK, I will preface stating that i am not an attorney.. yada yada yda.

I was talking to another ivnestor in central florida.  He said it was not illegal to lease the property back to the HO after you get the home after doing the SS.  What will kill you is if you tie an option with it.  So, in essence they become your tenants.  You never want to give them any equitable interst in the property.  I have never kept anybody in the house, nor do I intend to do so in the futre.  Hope that helps.

[REIguy]

I was talking to another ivnestor in central florida.  He said it was not illegal to lease the property back to the HO after you get the home after doing the SS.  What will kill you is if you tie an option with it. 

And why is that?  You should be able to lease the property back to someone and give them an option, why on earth wouldn't you be?

[moonstruckprincessa]

I believe the OP is saying that since he purchased the home at a paid down balance and with better credit, the amount that the owners would be leasing at would be less.

[PaulBroni]

I believe the OP is saying that since he purchased the home at a paid down balance and with better credit, the amount that the owners would be leasing at would be less.

Because it will upset the lender to see that the borrower took a $100,000 mortgage and shorted it to $80,000 with a shill buyer, then "re-bought" the house back for $80,000.

[Tien]

Are you planning to buy subject to and than leasing to them?


Don't do it unless in rare rare scenarios. What makes you think they will make your payments?


And what will the judge think when you file eviction on them?


There is almost no reward to doing this and the risk is outstanding.

[REIguy]

I believe the OP is saying that since he purchased the home at a paid down balance and with better credit, the amount that the owners would be leasing at would be less.

Because it will upset the lender to see that the borrower took a $100,000 mortgage and shorted it to $80,000 with a shill buyer, then "re-bought" the house back for $80,000.

Ah I missed the short sale part of it.  I thought he meant there was somehting wrong with buying a property from a distressed homeowner, and then lease-optioning it back to them, which I understand to be totally okay.

[moonstruckprincessa]

That is what I was talking about. I have no experience with the other scenario. I was answering the question of them being able to afford rent if they could not afford the mortgage payment. My scenario was:  OP buys the house, getting rid of the mortgage for the sellers then leases the home he now owns to them. His mortgage payment will be much less than theirs, so the rent would be less as well.   

[PaulBroni]

Short sale issue aside (which was not part of the OP's post...we all added that), if you are able to buy the house with a lower payment for yourself, you could, in theory, rent the house for a lower amount to the previous owner, enabling them to stay.

Problems: Your monthly payment probably won't be all *that* much lower than their old payment, unless they were paying a ridiculous interest rate. If they couldn't pay $1,000/month, then paying $800/month won't be all that much easier. Also, if your rent ends up being below market, why would you do that? Just because your mortgage is less doesn't mean you should charge less rent. You should charge what the market will bear, and if that's more, then get more.

[moonstruckprincessa]

They have paid down the mortgage for an amount of time and especially if the OP does a SS, the amount paid will be less. The OP also stated that he's trying to help the people. sometimes, money is not the most important thing. Just a thought. Perhaps some more info from the OP would help us help?

[Handyman]

If you want to help the homeowner did you talk to the bank about doing a forebearence or a mortgage modification.  Will the bank take the payments they are behind and add them to the back end of loan thus making them current and they can stay in their house.  The homeowner would have to show they are capable of making the payments.
Before I would let someone stay in the house you should check your states usury laws.