Equity Stripping....Sellers / buyers / investors beware.
This past Thursday I had one of my Associates ask me to join her in a seller consultation. Of course, that I what I do for our Associates.
Now see if you can follow this; The now seller/investor was approached by a "Property Management Company" as a potential buyer for an investment property one year ago. Buyer/investor was told how everyone is going to help a homeowner to stay in their home, not loose the home to foreclosure and you (the buyer/investor) are going to be a hero, if we can just use you credit to secure a loan.
The buyer/investor was told buyer/investor would receive $8,000.00 after closing, the PMC would handle all details of property, including paying the mortgage, there is no downside and all the paperwork is being handled by an attoney, so you know it's a good and legal deal. The buyer/investor bought.
The seller side; seller behind on mortgage, over a 130K in equity and distraught. PMC comes in and presents this to seller; We'll buy your home. We'll let you stay in your home rent free for a year. We'll let you buy back your property after you get everything together, income, credit etc. The buy back price will be current market value, but you will save you credit, have no rent for a year and save your home from foreclosure.
At closing the buyer/investor bought with no money down, the seller netted $5,000.00 and the PMC put $133,000 in their account, then paid buyer/investor $8,000.00.
One year later; PMC owners (three) are no were to be found. PMC is out of business. PMC was never licensed by state to manage property.
Now owner/investor has to pay mortgage and can not. Will be one month behind March 1st. .
Now tenant, has now been served an eviction notice for not paying rent. In addition; both the Seller/now tenant and PMC had attorneys, the buyer/investor, now owner, did not.
Advise; To public; Call me before you make any move that sounds to good to be true or for a second opinion on any matter on RE or get your own attorney.
Advise to the current investor/seller: Secure the services of an attorney, report to Attorney General of NJ.
Our action as a Real Estate Company at this time, we could not render any further advise or help to now investor/seller. We did not list the property.