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Question
Is there program which allows you to buy a house with bad credit?
I take home $2300 a month, and currently paying rent, my lease is up soon, and I saw an ad on craigslist no cash down, no credit check, just take over the mortgage payments,, how does this benefit the person thats trying to avoid foreclosure?
sandiego.craigslist.org/ssd/apa/969...
I SAW THIS AD AND WONDERED IF IT WAS A SCAM
Best Answer
The ad was flagged by the time I got there. It might or might not be a scam. There are a couple of ways it can legitimately work.
The first is "subject to" the existing mortgage. Usually, it's investors who buy "subject to." That means the owner deeds the property to an investor. The investor promises to make up any back payments and to make the mortgage payments. At some point in the future, the investor refinances the loan, thus taking the previous owner off the mortgage. It could be structured that same way by an investor in a "sandwich" structure. That is, the investor could set the deal up and then, for a fee, assign the deal to you.
The second way, which I strongly suspect it is, is using a land trust (specifically, a variation called a NEHTrust developed by a real estate expert named Bill Gatten). What happens is that the owner transfers the property into a land trust. You are added as a beneficiary to the land trust. (And the investor is also added as a beneficiary to the trust.) You pay the mortgage payments to the trust's trustee, who then makes payments to the bank. There isn't an agreed-upon purchase price, as there would be with a lease-option. However, there's what's called a "mutually agreed value" between the investor and the settlor (the seller), on top of which the investor builds some profit for himself. You'd have two agreements: One as a resident beneficiary (giving you the right to purchase the property in your own name in the future) and the other as a tenant, in which you're leasing the property from the trust. It works similar to a lease-option, but is a lot safer for you and the seller. For more information, go to www.landtrust.net.
In either of these scenarios--subject to or land trust--the benefit to the person trying to avoid foreclosure is that he avoids foreclosure. His back payments are made up, and future payments reach the lender on time. His credit is restored over time. In either scenario, he might ultimately receive some payment for his house, or none at all.
Regarding the due-on-sale clause (as mentioned above), a subject to will violate the due on sale clause. A land trust (per the Garn St. Germain Act) will not. Violating the due on sale clause means the lender can call the mortgage due and payable at once. Note: Violation of the due on sale clause is not illegal. (It may be dangerous, but it's not illegal. You won't be thrown in jail over it.)
Both of these techniques provide advantages to the purchaser. The primary one is that the deed is moved out of the name of the person facing foreclosure. In the case of a subject to, it's put in the name of the purchaser. In a land trust, it's put in the name of the third party trustee. So, if from that point forward payments are made on time, the property won't be foreclosed upon.
Again, I don't know whether the specific ad you saw was using either of those techniques. It might have been, or it might have been a scam. My point here, though, is to say that the structure described in the ad could be done legally, and could benefit you.
Hope that helps.
Other Answers
It might be a scam because when u click on the link it says that the add has been flagged
by poohbabyclue - 3 years agoIt benefits the person trying to avoid foreclosure, because you make the payments instead of that person. You would need to go through a title company to make sure the title to the house is in your name. Warning, though. Most mortgages have "due on sale" clauses, and the mortgage company could accelerate the loan when it finds out the title has changed. It finds out when it receives the bill for ad valorem tax.
by jefferson23 - 3 years agomake sure you do not by-pass escrow. Meaning, use a title company.
The seller' has to wrap their mortgage. IN most cases that
cannot be done legally anymore. Thus, you have to lease the
house for x period of time till you can afford to get the mortgage
into your name but do NOT pay the home owner direct!!!
pay into an escrow company's acct so that there will be no
doubt as to your and everyone's intent!
Source(s)
RE broker
by kemperk - 3 years agoThere ARE programs that USED TO allow people with bad credit to buy a house and THAT is what got us into this mess. Also think alittle, IF somebody is willing to "walk away" from a house and LET you "buy" it with NO cash down payment, NO credit check, and just take over payment then the HAS to be a reason why and an EASY guess is that with values FALLING OVER 30% in some areas the person who is SO NICE "selling" you that house OWES MORE THEN IT IS WORTH!
IF there was more value in the house then owed on the loan; this house would be selling and the owner keeping a profit. If they CAN'T sell for more then is owed then they try to "give away" the house to somebody who WILL assume a note for MORE then the house is worth.
Source(s)
Realtor.
by Jerrold J - 3 years agoSCAM
by john m - 3 years agoThat sounds way too good to be true and sounds like a scam. Why would someone hand over their property with NO money down NO credit check etc? That just sounds fishy.
Bad credit at this point is going to prevent you from buying a house. The programs for those with less than stellar credit were 3 years ago and how most people got into the pickle they find themselves in now.
Do things the right way: get your credit in order, get a good down payment and then buy a house.
