Question:

Taking over foreclosure payments?

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So, I'm in the process of renting an apartment, and I'm seeing a lot of ads on craigslist, etc. for foreclosed houses supposedly with really low payments, no down payment, no credit check -- like, significantly cheaper than rent on an apartment usually is (i'm in southern california). i'm honestly a bit naive about things like real estate -- is there a way of knowing if these offers/companies are valid, and if they are, is there a downside to doing this? it seems it would be insane to rent a smaller place for $500-$800 more a month if these are for real. thanks!!

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  1. Of course there is a downside.  The sellers are attempting to avoid a foreclosure by simply having someone else take over their financial mortgage obligations, and turning over ownership of the property to a buyer.  Understand that the mortgage will remain in the names of the original owners, and that means that YOU cannot use any interest paid as a tax deduction.  The IRS Form 1098 which reports interest paid will be sent to the former owners.  The IRS won't tolerate YOU claiming the interest deduction when the mortgage is not in your name.

    As well, the benefit of a good credit history will also go to the former owners, since the mortgage remains in their names and will be reported to the credit bureaus accordingly.

    As if that is not enough, if the lender finds out about this, they can call the loan due in full immediately.  They might not do so, but they CAN.


  2. After determining if these ads are for real, keep a few things in mind when you are considering purchase.  You are responsible for all repairs and maintenance of your own home.  You can purchase insurance for major castastophes, but if the refridgerator dies, you have to put out $500-$1000 or more to replace it.  You have to do all of the maintenance including mowing the lawn, cleaning the gutters, sealing or repaving the driveway, shoveling snow, fixing or replacing appliances, unclogging the toilet....you get the idea.  So make sure you are willing to do the work related to owning a house before you buy one.

  3. Yes, there are scammers out there, and there are also legitimate deals that are advertised on craigslist.

    This website is one of the places I advertise my owner finance deals. You can verify if they are in fact the owners of the property, and protect yourself.

    Number one - insist that you use a lawyer to go over the paperwork with you. A reliable real estate attorney will do this for around $200-$400.

    Number two - check out the counties website. The person who holds the deed to the house will be listed on the county recorders website. This is a quick way to check and see if the people selling are actually the owners. An attorney can do this for you as well.

    There are deals out there that a person who is not the owner can sell a property - this is when the property in under contract, and the seller is selling the contract, not necessarily the property - also known as an assignment.

    With a little preventative maintenance, and protection - you can find great deals out there.


  4. idk

  5. There are real estate agents that specialize in foreclosed homes (called REOs). Contact a reputable Real Estate company and ask for the name of their realtors that deal with REOs.

  6. Best way to find a valid listing of foreclosed homes and condos is through a Realtor. What happens is that, once a foreclosure occurs, the bank becomes the owner of the property. These bank-owned properties are called REOs ("real estate owned). Sooner or later, the banks will list the properties with a Realtor, and the listings will go into the MLS.

    Banks don't sell the properties themselves, and they don't sell them privately. They want to get top dollar (still may be a good value for the buyer), so they list them on the MLS.

    Before a foreclosure, there's a period of time--essentially from the first late payment to the date of the auction--known as "pre-foreclosure." This is when properties sometimes are listed as short sales. Realtors handle a lot of these, too. However, because the property in pre-foreclosure is still owned by the original owner, it's up to the original owner to decide what, if anything, he wants to do: List it with a Realtor, attempt to sell it on his own, ignore the situation, and so on.

    REO sales can be somewhat more complicated than "normal" sales. However, they generally are much smoother and quicker than short sales. Short sales can take months and months (I'm a real estate investor and last night heard a short sale expert describe one she's been working on for 10 months.). And they often fall through. They're very unpredictable.

    Hope that helps.

  7. sorry to say its a scam. below is a news article.

    the very best thing ALWAYS is to call a Real Estate agent. it does not cost you more to use one. unless you are the seller. ask the real estate agent if they have any properties that are going to foreclosure soon and try to do a short sale. call this company and they can help you negotiate the short sale with the lender once you find a property.... www.Foreclosuremc.com

    a short sale is a great way to get a house at an awesome price. for instance i recently negotiated a short sale where the homeowner owed $423k on the property. i got the bank to allow the buyer to purchase the property for $220k. the best part was the homeowner got out of some huge debt without any negative recourse. he had $203k in debt written off without even having the tax liability thanks to the Mortgage FOrgiveness Tax Relief Act of 2007

    Another Day, Another Craigslist Scam: News At 11

    Michael Learmonth | July 30, 2008 6:30 AM

    From the daily Craigslist police blotter: a young Arizona family lost all their savings when they answered a Craiglist ad for a four-bedroom home in Phoenix.

    They showed up to the house ($1,000 a month, includes pool), took a tour, signed a lease and paid the $1,500 deposit in cash. Then, they took a celebratory dip in the pool with the kids. At this point, you probably know where this one is going.

    When they showed up that weekend to move in, of course, they found the owner of the property, the real landlord, was not the person who had taken their money. Phoenix police are investigating.

    This isn't as elaborate as the last Craigslist scam to make headlines -- the Oregon family that had their possessions sold, without their permission, on the site. But it's one of the dozens of petty crimes that actually make headlines just because it was connected, somehow, to Craigslist. If that ad is placed in the Arizona Republic, it doesn't make the news, but it's a free ad on listing service, it becomes "a rental scam you need to know about before you get taken too" on KTVK's "News At 9 pm."

    Craigslist CEO Jim Buckmaster told us he's used to it. He says he makes a point of reading the "crimes on Craigslist" headlines on Google News. Jim says his company "take[s] personally the misuse of Craigslist by criminal element," but he's more amazed how few crimes appear to be committed using Craigslist, given that 35 million new classified ads run on the service each month. How has the Craigslist community has managed to keep a semblance of its ethos even as it expands to encompass every aspect--even unsavory aspects--of society? Hard to know. But because Phoenix is one of Craigslist's fastest-growing cities, expect local newspeople to work through their distrust of it.

    But it turns out, Craigslist-like karma was at work, even for our Phoenix family of nine (!). The owners of the house in question took pity on them and decided ... to let them stay! They're working with them on the rent and were so touched by their plight they threw in August as a freebee.

  8. that is why people get into trouble, because of gimmicks, greed or all of the above, and then the d**n gov has to rescue them, and guess who pays for that? they take it out of our taxes, pls research research research and dont look on craigslist for homes, make sure you make well over 50k and that you have a good real estate lawyer

    good luck!

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