Home Buying in Sacramento>Question Details

Rosalyne, Home Buyer in Sacramento, CA

What does it mean to take over the payments on a pre foreclosure home?

Asked by Rosalyne, Sacramento, CA Sun Nov 16, 2008

I live in California and am looking for a home to rent. I keep running across ads in the rental section that say "take over the payments". Is it really that simple, or is there possibly alot of money to spend to get into this home? thank you.

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I don't know about CA, but this is what happened to us. We were almost in foreclosure on our Arizona home. Three month's behind. A friend of ours came in and leased the house and started making the payments. After three payments, the lender put the late payments at the end. Then we signed a quiet claim to our deed to our friend. Then M&I Bank after our friend made 6 more payments, put the loan in their name.

That was it. This was with M&I Bank, and everyone was happy. We didn't make anything off the house but didn't loose the home to the bank, and salvaged a little bit of our credit that is useless right now anyway.

Bob
0 votes Thank Flag Link Mon Sep 21, 2009
Rosalyne, Chances are you are NOT dealing with the Homeowner at all but some shark who has put himself in between you and the Homeowner. They usually try and get a quit claim deed on the former owner's property, do a "subject to" of the original loan and payments (this is not allowed and will force further immediate action on the property against the homeowner should the lender discove the charade) and then try to get a sucker to come along and "think" they are getting a deal on a price as the alledged "new" owner sells for way below the recorded documented loans or worse yet does a "lease-option". They of course will need a "Option" payment plus first and last rental payments or the payments owed on the house, then they walk and leave you holding a worthless investment. These "Sharks" also do this to many folks on the SAME house!! Don't fall prey to these sharks. If you can't qualify for a home now, even with FHA, then you should NOT be buying but planning and saving for the future. These prices are going to be with us for a while to come so don't panic and make a dumb mistake!
0 votes Thank Flag Link Mon Nov 17, 2008
Dear Rosalyne: What a great question. This is just a small example of the desperation of sellers and property owners in this market. My advice to you is this: Some of these deals are viable, but you need to investigate the viability of the deal. There just isn't enough information given here to help you with any certainty.

Your first place to start is with a trusted and reputable Realtor and then you should add to your team an attorney who is specializing in real estate transactions. This team can investigate the viability of your "taking over payments" for a particular home.

Good luck, and yes, there are some great opportunities to be had in today's real estate market.
Web Reference: http://SoldByErin.net
0 votes Thank Flag Link Mon Nov 17, 2008
Hi Rosalyne: It sounds like a scam. You can't take over the payments without bringing the loan in default current, which could include many months of back payments and foreclosure fees. Having said that, let me also that if the loan is not in default, it would be possible.

Although no loans are assumable and lenders have the right to exercise the alienation clause by demanding full payment upon transfer title, nowadays most lenders are just happy to get payments from somebody -- anybody!

The question you need to ask yourself is how much is the property worth? If it's worth less than the amount of the mortgage(s) secured to it -- so much less that the existing owners are willing to deed it over to you and walk away -- why would you want it?
0 votes Thank Flag Link Mon Nov 17, 2008
In most cases people are looking for a last ditch effort to save their home by having someone bring their loan current and then payig rent equal to the monthly mortgage. The keys are you dont own anything, you have no security, the home owner can not deed it over to you as they have a mortgage that will not allow it, it is being done and it could mean instant foreclosure for you. Now some loans are assumable, in those cases it would be legit. No matter what, if you decide you want to try this root, have an attorney review everything before signing or giving an money.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Mon Nov 17, 2008
Hmm...sounds fishy to me too.

Some types of loans are assumable, meaning the home buyer has the ability to take over the existing mortgage of the seller...however assumable mortgages require the lender’s approval. When you assume a mortgage you inherit both its interest rate and monthly payment schedule. As a buyer, you would still need to qualify for the loan and you have to pay closing fees, including the costs of the appraisal, title insurance, etc.

If it sounds too good to be true it probaby is. I would have an attorney review anything like this first.
Web Reference: http://www.sacreblog.com
0 votes Thank Flag Link Mon Nov 17, 2008
Erin Stumpf, Real Estate Pro in Sacramento, CA
MVP'08
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Rosalyne,
I am guessing here, as you have not provided a lot of information, but let me see if I can take a guess.
You are looking for a place to rent, and people are advertising homes that are in foreclosure and telling you that if you take over payments they will rent it to you. If this is correct let me make a few observations.

1. You will have to do more than just take over payments, you will have to remedy the foreclosure.
By this I mean, if they are 3 months behind, you will have to pay the 3 months rent and any penalties before the home mortgage will be current.

2. You must ensure that if you are willing to do this, that you make the payment to the lender yourself or have an attorney assist you. ~ this is because if you pay all the cost to the landlord and do nothing to ensure it is current, then the landlord / homeowner could just walk away with your money and the remedy may never take place.

3. You must make sure the payments are being made to the lender on a monthly basis and that the payments are for the full amount of the mortgage payment and possibly any escrow such as Taxes & Insurance. ~ if you do not do this, then again, the situation could occur again and you will be left with being stuck living in a home that is in foreclosure, or a home that has continual liens being placed upon it that in the future could be subject to foreclosure due to the liens.

4. I strongly suggest you find a GOOD agent and possibly an attorney who knows your tenant rights and has the tenacity to ensure you are not being taken advantage of and that you are protected and educated.

These situation appear to be more hassle and cost than they are worth, but I am speaking sight unseen without all the details. So all I can do is suggest you protect yourself the best you can.

Despite me being in Florida, these should be relevant and are what I would tell my own client here in Orlandao if asked for my professional opinion.
0 votes Thank Flag Link Sun Nov 16, 2008
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