Foreclosure in Atlanta>Question Details

enraptured69, Home Buyer in Atlanta, GA

Is it possible to make an arrangement with a homeowner who is underwater and cannot sell their house?

Asked by enraptured69, Atlanta, GA Wed Sep 12, 2012

More specifically, I will guarantee to pay the mortgage for a set amount of time. In return I live in the house till it sells. If it sells we split any equity. If it doesn't sell before the agreed upon timeframe ends then the house gets signed over to me.

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Larry Tollen’s answer
What you're proposing isn't illegal so if you and the owner of the property agree to it and have a lawyer put this agreement together in a contract that you each sign that clearly lays out the terms of your agreement and insures that both of you are in compliance with any applicable state and federal laws then you're good to go. Each of you should understand and be comfortable with whatever it is you're agreeing to, bear in mind if the owner of the property is delinquent on the mortgage payments it's possible the house could be foreclosed on if these are not made current. In addition to the mortgage being paid, don't forget that property taxes and insurance will need to be addressed if their not already included in the monthly mortgage payment.
1 vote Thank Flag Link Thu Sep 13, 2012
Assuming the seller are just trying to preserve their credit, it makes sence to me. Based on what you have posted, if it is below market rent and you understand you might have to move soon in the event of sale or foreclosure, itakes sence to me. If you credit qualify (580+ credit score) and have 3.5% down payment you really should consider buying.
0 votes Thank Flag Link Thu Sep 13, 2012
If you want to buy the house, make an offer. The lender/investor will work with you.

Nobody, but nobody should create a situation where you have ANY equitable interest in the property. Never ever, ever!

If you are not qualified to buy the house, don't make an offer.

If you are seeking shelter, pay the rent. Just like every other renter, when time is up, there will be no equity to split and you most certainly won't have the property signed over to you. Somehow you didn't account for who really owns the house, the lender/investor. They usually have something to say about signing over their collateral.

Clearly there is a lot missing from the description of the arrangement. You may find it beneficial to consult with an Atlanta professional to discuss what is possible and what is probable.

If you can afford to pay the mortgage on an over financed house, why don't you just buy? Tell us the rest of the story.
0 votes Thank Flag Link Fri Sep 14, 2012
This actually sounds like it would benefit you and NOT the distressed home owner. Unless you put the home in your name (if you qualify) so that the owner is not liable. Remember, they want to get out of this only slightly bruised not totally disabled.
0 votes Thank Flag Link Fri Sep 14, 2012
I think that your proposition would be highly risky and of no benefit to the homeowner who is underwater.

“More specifically, I will guarantee to pay the mortgage for a set amount of time.”
How long? The house is upside-down. How long before that changes? Months? Years?

“In return I live in the house till it sells.”
That sounds like rent to me. If you are paying the current mortgage I think you could find a comparable house to rent for less. Do you expect to stop paying at some point and continue to live there?

“If it sells we split any equity.”
Currently, the house has no equity. It could only sell as a short sale.

“If it doesn't sell before the agreed upon timeframe ends then the house gets signed over to me.”
Does the “agreed upon time frame” have any bearing on reality? If the owner signs the house over to you, the owner will remain liable for the mortgage. You would not “own” the house unless you pay off the mortgage.
0 votes Thank Flag Link Thu Sep 13, 2012
Anything is possible. If the home is underwater, however, there is very little chance of there being any equity resulting from a sale since more is owed on the house than it is worth.
0 votes Thank Flag Link Thu Sep 13, 2012
If the property currently has a mortgage on it, the owner cannot legally transfer the title to a buyer without the mortgage first being paid in full. Most all mortgage loans have a due on sale clause. This due on sale clause requires that the mortgage be paid in full should a title transfer occur.

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Prospect Mortgage
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0 votes Thank Flag Link Thu Sep 13, 2012
Sure, but the bank must be satisfied as well.
0 votes Thank Flag Link Thu Sep 13, 2012
Ok, so basically you are going to rent the house with first right of refusal when your contract expires and your contract will have an annual renewal term not to exceed 5 or 7 years. Do I have that right?

If your credit is halfway decent and the loan on the house is assumable, this may be a better option. Most all FHA, VA and some Conventional loans are assumable. You have to qualify for this ability (ask the lender of the note). There's no Realtor, no loan officer, just you, the seller and the attorney. At least this way, you have the title and the loan regardless of your business contract. Money can build relationships but more easily, it can destroy them.
0 votes Thank Flag Link Thu Sep 13, 2012

The market has changed considerably and houses do not sit for any length of time. Everytime I put a house on the market (especially shortsales or pre-foreclosures) I get multiple contracts within days of putting the property on the market.
0 votes Thank Flag Link Thu Sep 13, 2012
Hi Enraptured69,

This is not a good idea. It's not likely there will be any equity to split anytime soon, if you just want to help a friend out that's a little different. You also mentioned that if the house doesn't sell in a certain time frame the house get's signed over to you......although we don't have all the facts it just doesn't sound right. I think you should try to get qualified and find a house that you want to purchase. As they say if it sounds too good to be true it probably is.
0 votes Thank Flag Link Thu Sep 13, 2012
This sounds like some kind of scam. The market is so depressed that it may take 10 years or more for any equity to accrue. Are you willing to live in the house that long? Why would you pay a mortgage that is more than the home is worth? If the house doesn't sell,who will guarantee the mortgage is satisfied or is transferred into your name so that the liability is on you and not the current homeowner? I would never recommend such an arrangement to any of my clients! Would you?
0 votes Thank Flag Link Thu Sep 13, 2012
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