Posted by Brad on June 01, 2005 at 08:34:33:
Be careful cuz it seems a bit fishy. I mean if the current owners’ scores are too low to do a cash out refi now, can they really improve their score A LOT in 6-24 months? Also, if you do this make sure to take steps to protect your option (ie performance mortgage and deeds in escrow). This way you won’t get screwed on the backend by some dumb lawsuit stating that the transaction was actually a disguised loan.
If a judge would rule that this is a disquised loan, your agreement would be null and void and then you’ve got a really nasty battle. Also, this agreement could be usurious (aka loan sharking) and if you do multiples as the post states, you could be charged with usury and a whole bunch of nasty racketeering charges. I’d go over the legalities with a lawyer. Just my opinion but I’d be careful.