150K up-side down on home

[gisele2007]

I am checking to see if anyone has heard of this program where a group of investors are buying back notes from the bank.  I am currently 150k upside down on my home (morgage 410K and value of home 260K and 5 year ARM is up in a few months).  A loan officer offering a program where the investors would buy the note on my house from the bank at a discount say 200K cash and turn around and re-sell the house back to me with some equity so that I can refinance.  Is that legal for investor to re-sell t back to the original owner with a lower price?  Also is there is a $1600 up-front fee.  Is this a scam? Or is this one of those investor short-sale deal?  Will this affect my credit or my ability to buy future properties? 

Please share your thoughts and knowledge.     

[ShortSalePro]

Wow...  It sounds like they are shorting it and trying to sell it back to you.  That doesn't sound kosher to me. 

A short sale is supposed to be an arms-length transaction.  The homeowner is legally not supposed to get any cash out of the transaction, nor is the home allowed to go into a family members name, etc.

It sounds like a shady deal to me.  If you want debt relief, do a straight legal short sale, the right way.  FNMA and Freddie Mac have release guidelines on what they consider a legal short sale/flip transaction to be.

A long as you stay within those guidelines you'll be okay.  The Feds arent playing games.

Be sure and work with someone who knows how to explain what your liability could be after the short sale, and how to avoid problems with the IRS.   Also be sure that company has a track record of getting deficiency judgments waived.

Be very careful about who you hire to help you.  The Feds are actively going after fraudsters.  Don't get caught in a bad situation...

[Summit]

I would like to know who is offering that service so that I can stay away from them! LOL.. I really don't think I would look good in a Orange jump suit. Even though I guess with the economy the way it is free rent and 3 meals a day might not be that bad. And I have enough money to buy candy bars and chips for a few years. I once talked to a guy that did time in a Federal Prison and from what I heard it was not that bad. If the economy does not improve this might be an option! 

[Bluemoon06]

I’ll bet what will happen is what they want is the house on a short sale.  This is a ploy to get you to participate.  After they have the house you will most likely be out on the street and they will have your house.

[tatertot]

My first reaction was that all they are after is the $1600 front fee. Hand them that and you'll probably never hear from them again.

It's my understanding that when banks sell their mortgages, they do not sell individual mortgages to a specific house. They sell packages of mortgages and your house might be included, it might not.

At any rate, I don't think this passes the sniff test.

[christopher w]

Gisele,

The short sale will be viewed as a foreclosure by conventional and FHA underwriters. You will not be able to buy this house back using any sort of traditonal financing so unless they are going to sell it to you utilizing owner financing you will lose both your $1600 and your house.

With that being said it sounds like you are in a tough situation. Here is some positive news though. Because of where rates are right now as well as all of the major indexes you will most likely see your rate drop once it starts adjusting. For how long I can't say, but it should go down.

[moellerryan]

That sounds very fishy.  They are basically short selling it and allowing you to buy it back which the bank will not find too ethical and maybe illegal.  And they are charging a $1600 fee which I imagine is upfront and non-refundable?  Go with the I will believe it when I see it theory.  If you can find 5-10 people where it has worked ethically, legally and successfully then it is a viable option.

Another option is to short sell your home, credit can always be rebuilt and another home can always be bought with equity.