Banks are crying foul about Mortgage Assignment/Subject to Financing! Greater banks, Realtors, and lenders i meet with about "Mortgage Assignment/Subject to Existing Financing" transactions are now discussing them as being a Foreclosure Rescue SCAM! The reason they assert this, is really because thes transactions are PREDATORY naturally. The distressed homeowner is being presented magic solution that produces huge promises that cannot be kept.
Many real estate information marketers are telling their students the "Mortgage Assignments/ Subject to" strategy is legal. I have some news to suit your needs. That it is not true. These property information marketers continue to say a similar mantra: "Show me the statute that claims Mortgage Assignment/Subject to" investing is prohibited.
Technically in lots of states you can't imply to them directly a specific statuate. Even so the truth remains that many attorneys assert the Mortgage Assignment/Subject to financing investing strategy is VERY problematic. Some attorneys have said (off the record) that when you do a couple of of those transactions and zip fails you can probably stay individually distinct and out of trouble. The attorneys however did STRESS when you need to do this investing technique it should be only considered only being a very short term technique for 3 to 4 months. Which is the sole method they identify that you wont get caught!
The large issue everybody is concerned about is:
What happens and who is responsible in the event the "new" buyer stops paying around the mortgage? History shows us that 80% of sub-prime mortgages have gone bad. The thing that makes the real estate investor beleve the Mortgage Assignment/Subject to Financing deal wont go south? If you've been within the real estate industry for a specified duration.. you know 70% of Lease Options when compared also go sour or never cashed out!
Who's responsible whenever a Mortgage Assignment/Subject to Financing deal goes bad?
Answer: It's the individual that place the transaction together!!! No matter one iota for those who have a CYA (Cover Your Ass) letter at all! The fact owner was offered a PREDATORY solution and possibly was at duress during the time, they would probably sign anything.
I understand you have been told by these guru's which a CYA letter in addition to a few other fluff documentation is you need. Yet, in a standard real estate property transaction there's no such requirement. This then becomes not only a complex transaction but now goes into the whole world of a "scheme". Do not think me yet? Send the financial institution the CYA letter and have these to give back a confirmation about the terms of the CYA letter! They will NOT undertake it!
Lets move on to in the event the transaction in time breaks down. Suppose you end up going to trial along with both " Mr. Unhappy Seller" and "Mr. In Default Buyer" (who paid real estate investor $5,000 to buy the underwater property) within the same room.
You show up in the courtroom and you say to your attorney No problems, I have my CYA letter with me at night, I've not even attempt to worry about..
Well he is not planning to allow you to present the CYA letter! Knowledgeable property attorneys say that this actual letter itself SHOWS INTENT to DEFRAUD! Not one attorney I spoke to wants this letter to show up in evidence as it is incriminating.
I have to share with you portion of a transcript in a very court case with regards to a "Mortgage Assignmetn/Subject To Finacing" Investor was on trial. This is how it went (sic):
The Prosecutor asks for the witness stand:
Sir, am i right in stating that you possess the house, however are not in charge of make payment on mortgage?
You: Yes Sir, I have a "Cover your Asset" letter signed through the seller, proclaiming that I don't have to pay or is it necessary any liability or responsibility to generate payments for the house.
Prosecutor says to jury:
Go of you own your own home and do not must pay your loan payment? What about a motor vehicle or plastic card?
Everyone on the jury shakes heads their heads NO.
Prosecutor looks at the jury and says to all in the jurors: So, just how could this be? Can you observe that this can be a complex scheme? This is simply not a standard document in any real estate property transaction!
Now true is really won for the Prosecution and rests.
The Defendant gets convicted for Mail Fraud on multiple counts. Why? Every rent check he RECEIVED was considered MAIL fraud since. The checks had come in the mail (even though the checks were deposited and paid to the bank) The defendant got 16 months in jail.
Could it be worth a chance to accomplish a mortgage assignment/subject to existing finance transaction? I think not!
