Rent-to-Own Nightmare in Phoenix AZ

I have been writing short sale nightmare stories in Phoenix, Scottsdale, Peoria, Fountain Hills and Tempe for some time.

I have shared stories about banks ignore offers that request Down Payment Assistance. There are banks that will only accept cash offers.

I have spoken about lenders wanting additional monies for buyers using FHA loans. I have even spoken about sellers .

I also shared a seller nightmare with short sales who had money in a bank account frozen due to a pending short sale with that same bank.

Today, we have a new and very said story about the little buyer that could. and then couldn't.

Let's call him Mr. First Time homeowner.

Mr. First Time homeowner found a condominium in Scottsdale that he loved. He put in an offer , which got accepted. However, 6 months ago during the loan application process the bank canceled 100% majority financing. So, unfortunately, the buyer that could, could not qualify for a loan without 5% down payment.

Mr. First Time homeowners agent , being the astute agent who could think outside the box suggested a 100% lease-option program which would allow several things to happen.

1. Mr. First Time homeowner could lock in the home at today's prices.
2. If the house rose in value, (yes, believe it or not, this does happen) he was in contract at that price.
3. If house decreased in value, he could buy at the lower price.
4. He also had the ability to see if he liked the home, neighborhood, owning a condo
5. Finally, the money each month accumulated for a down payment.

Sounds great right ?? Wrong.

Here's what happened.

After 7 months of payments, Mr. First Time homeowner had enough accumulated that he again applied for a loan application.

However, as we know, the lending industry, including Fannie Mae and Freddie Mac has gone through great turmoil. Bank lending guidelines have gotten much more strict.

Now, the banks are telling Mr. First Time homeowner that he needs 20% down.

The buyer does not have that money. He cannot close the loan. Yes, he had a place to live, but now has paid money up and beyond the amount of a normal lease which for all intent and purpose has thrown out the window.

Further, he could have purchased somewhere else 7 months ago that qualified him under FHA loans and seller assisted down payments. However, his agent and the listing agent told him this would work.

This is a very sad situation for Mr. First Time homeowner.

Now, he has lost money, lost 6 months of time, and cannot buy any home as seller-assisted down payments are banned (as of October 1) and lenders are no longer taking new loan applications due to that time limitation.

I need to point out that this could have been prevented had the buyer's agent properly prepared a lease-option contract with specific contingency clauses

These are complicated transactions. There are several types of rent-to-own programs like Lease Options and Lease Purchase.

Hire a real estate attorney or experienced real estate professionals who can prepare documents, explain and protect your interests.

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© James Wexler, *Rent to Own Nightmare in Phoenix AZ*

Contact James Wexler (480) 221-8080 for all your Phoenix AZ | Scottsdale AZ Real Estate needs.