You've seen those signs, I know you have. And if you are one of the millions of people across the country having trouble making the payments on your home or are already facing foreclosure, these signs can seem like the answer to all of your prayers.
But people in this situation tend to be very vunerable to shady characters that don't care at all about the homeowner...they only care about their own bottom line.
I totally understand the real estate investor's bottom-line mentality. They invest money to make a profit and that's fine. What I have a serious problem with is the tricky language, complicated contracts and unrealistic terms that some of these investors layout for uneducated homeowners that find themselves in a tight spot.
I have seen too many people lose all of the equity in their home and end up with no place to go because they made a deal to "save" their home and credit with one of these foreclosure bailout investors. They sign a contract where the investor will catch them up on payments and put the deed to the house in the investor's name while allowing the homeowner to stay in the house and pay rent to the investor. The endgame is supposed to be that the homeowner pays their rent on time for 12 months and then refinances the home back into their name after they can reflect a year of on-time payments. The investor and the homeowner agree up-front on the amount of money the homeowner will give the investor when they refinance the house. Sounds good, right? It can be...and there are some scrupulous investors out there who know that this is a great way to make money and be able to sleep at night.
But, there are a lot of investors out there that glaze over the fact that one missed payment means immediate eviction for the homeowner. And if the homeowner gets evicted they lose ALL of the equity that may be in their homes...every dime. The investor has the house, has usually made a very small investment to bring the homeowner current on their mortgage and now has a vacant property that they can sell below market value and still turn a tremendous profit.
It breaks my heart to see this happening, especially when many of these homeowners do have other options that could be much better alternatives. If you know someone who is having trouble and is considering calling on one of these "prayer-answering" signs, please talk to them and make sure that they read EVERY SINGLE document carefully, get an attorney if necessary and just watch out for themselves and make sure everything is on the up and up before they sign anything.
Just like during the real estate boom of the last few years when borrowers were taken advantage of left and right by shady lenders who were willing to slam anyone into a loan, regardless of the risks...now many of those same borrowers are being taken advantage of by shady investors who are only interested in taking the house and walking away with as much money as possible...they have no interest in the homeowner or their future. Beware, that's all I'm saying.
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