Given the number of foreclosures in my area, I’ve seen an opportunity to help homeowners to avoid these by purchasing their homes in the pre-foreclosure stage. My business model involves placing the home under contract and quiet titling the home on behalf of the home owner. Homes are selected based upon resale risk and type of current mortgage on the property. Homeowners are typically underwater on loan to value and have had some life event that they are not able to recover from making their ability to stay in the home unlikely barring winning the lotto. We (myself and an money investor) offer to purchase the home with the intent of immediately reselling it at a profit contingent upon clearing the current mortgage from the property using a quiet title action and a mortgage audit identifying mortgage or foreclosure fraud or law breaking by the foreclosing party. The current homeowner will be given a percentage of net proceeds following final resale. This allows him to avoid foreclosure and get cash to restart his life. My question is what is the best strategy to control the homeowner during the entire transaction which is expected to take several months? We will need his cooperation to support the quiet title action in court. While it won’t cost him anything it will require a lot of paperwork and time with myself and possibly going to court. One thought was to move the property into a land trust with trustee instructions laid out as to getting to the resale with the beneficial interests laid out with in the trust documents. Just not sure a subject to contract would work in this case. Any suggestions or thoughts would be appreciated.
Horse or cart in the front?
I am a bit confused by the topic.
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I get the borrower / owner is losing the property given their situation and the debt owed vs. the value.
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I take it you think you can squeeze the lender through legal means to have the debt wiped out. Is that correct?
3a. I would say the legal paperwork or the legal structure that will work best has to be fit for purpose. As I am not sure what you are really trying to do it is hard to understand what legal structure would be best. Strategy first, best tool to use follows the strategy.
3b. Any reason this was posted in the general RE forum and not the legal forum?
Your not going to be able to control the homeowner. There is no good way to ensure their cooperation, and the instant they think the quiet title action is going to work, you can expect them to turn on you. Furthermore, any business model dependant upon the mistakes of others (lenders) is not going to win for long, as it is totally dependent upon luck, instead of actual work.
[QUOTE=AmotoXracer;883896]Your not going to be able to control the homeowner. There is no good way to ensure their cooperation, and the instant they think the quiet title action is going to work, you can expect them to turn on you. Furthermore, any business model dependant upon the mistakes of others (lenders) is not going to win for long, as it is totally dependent upon luck, instead of actual work.[/QUOTE]
Well said.
[QUOTE=John_Corey;883894]I am a bit confused by the topic.
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I get the borrower / owner is losing the property given their situation and the debt owed vs. the value.
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I take it you think you can squeeze the lender through legal means to have the debt wiped out. Is that correct?
3a. I would say the legal paperwork or the legal structure that will work best has to be fit for purpose. As I am not sure what you are really trying to do it is hard to understand what legal structure would be best. Strategy first, best tool to use follows the strategy.
3b. Any reason this was posted in the general RE forum and not the legal forum?[/QUOTE]
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That is correct.
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Yes, that is correct also. We’re using forensic audits to develop strong evidence of fraud and legal malfeasance of the party attempting foreclosure. These parties are pretender lenders attempting to get a “free” property. True lenders have already been compensated and don’t have a claim against the homeowner.
3.a. What we’re proposing to the distressed homeowner is that if he idly stands by, his home will surely be lost and he’ll be put out on the street. He has no financial resources to battle the foreclosing party or to hire the experts to develop the proof they have no right to foreclose. We are providing financial resources and expertise to strip the mortgage from his property using a quiet title court action. He must be involved as a plaintiff until completion of this process. As compensation he avoids the foreclosure and receives monetary compensation he never would have received prior to this venture. We in turn are compensated heavily for putting real dollars upfront that are at risk without a 100% guarantee of success and the responsibility for selling the property once the mortgage lien has been released. By the way, hearing about this happening is rare because of gag orders in place at settlement with the pretender lenders. I may have answered my own question in that this is really just a joint venture between the distressed homeowner, myself and my money investor to clear the lien against the property so it can be sold to a buyer at a high profit margin. It appears I should draw up a joint venture agreement with no one getting paid until the property is sold.
3.b. I probably should post on the legal forum.
[QUOTE=AmotoXracer;883896]Your not going to be able to control the homeowner. There is no good way to ensure their cooperation, and the instant they think the quiet title action is going to work, you can expect them to turn on you. Furthermore, any business model dependant upon the mistakes of others (lenders) is not going to win for long, as it is totally dependent upon luck, instead of actual work.[/QUOTE]
The homeowner will know the objective and be under contract. The business model requires a preliminary screening of mortgage and foreclosure documents for fraud and legal malfeasance. These are not “mistakes” by lenders, but actual fraud and in many cases a party other than the lender is illegally foreclosing. I assure you actual research work and legal processes are being done. Yes, there is no guarantee, but I believe there is an acceptable level of risk.
[QUOTE=FLDave;883904]The homeowner will know the objective and be under contract. The business model requires a preliminary screening of mortgage and foreclosure documents for fraud and legal malfeasance. These are not “mistakes” by lenders, but actual fraud and in many cases a party other than the lender is illegally foreclosing. I assure you actual research work and legal processes are being done. Yes, there is no guarantee, but I believe there is an acceptable level of risk.[/QUOTE]
I guess what I would like to know is, how many times you have done this in the past ?
Because if the answer is never, then i know somthing you dont.
Even if you are lucky enough to draw a judge in the quiet title action who is willing to use his position in a werid, activist sort of way, and you actually got the leins removed/expunged; the lender is going to turn around and sue for unjust enrichment (or somthing similar), and the whole time this is going on, lis pendens will be part of your title chain. Moreover, since you are entangled in the situation, you can expect to be named along with the borrower as a defendant in the unjust enrichment suit.
Maybe you can pull it off. Somone wins the lottery almost evey week.