Posted by Brent_IL on April 21, 2002 at 11:24:49:
If you can’t pay the loan, and can’t find anyone else to buy your position and pay the loan, your seller has breeched a civil agreement. Absent fraud, there are no criminal penalties. When the bank calls the loan, which is their right under the mortgage agreement, and the loan is not retired, they will foreclose on the seller and take title to the property. The original seller, and the person that you gave a L/O to will then sue you. If you buy at a price that is well-below FMV, assisting your buyer with a quick re-fi will bail you out of trouble. Maybe no profit, but no lawsuits, either. It?s a calculated risk. I personally believe the odds can be improved with a PACTrust, but there is some risk, nevertheless.