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Who's the owner?

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Geoff Hatcher

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Certified General Appraiser
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Ohio
Not going into too much detail, but I have some clients that I have made aware of some things going on in particular markets and particular people.

Anyway, I get several order's in this area. Properties were all purchased as foreclosures through MLS, then "sold" (deed transfered) outside of MLS with 100% owner financing. Orders are for a cash out re-fi. So I ask the "owner" about the prior transaction, and terms of owner mortgage.

To sum it up, basically the guy says,

I don't make any payments yet, I only have title to the properties, I won't own them until I get a mortgage.

Properties deeded to him between 6 and 9 months ago. They are all rentals, prior owner collects and keeps all rents, does maintenace, etc.

This will be a fun one to write up the explanation of the prior transfer. Any suggestions appreciated.

Thus giving some insight to my prior rants last week about courthouse records, not be adequate to verify a sale. At least this guy knows he has "Title" have run into many that weren't even aware they owned the property.
 
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Geoff Hatcher

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Jan 23, 2002
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Ohio
What is sad, is what these "investors" are being taught by this "creative financing". I always though ownership was transferred by deed. They believe it is being transferred by getting a mortgage. If they don't get a mortgage, it just get's signed back over.
 

PropertyEconomics

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New Mexico
What is sad, is what these "investors" are being taught by this "creative financing". I always though ownership was transferred by deed. They believe it is being transferred by getting a mortgage. If they don't get a mortgage, it just get's signed back over.



Until they run into the guy that wont sign who now OWNS the property because he has a deed. This one stinks to high heaven. I would FULLY DOCUMENT EVERYTHING HE SAID ... make full disclosure of who the "owner of record is" and let my client make all the decisions they need to.
Something is not right in this fish pond ... and you want to make sure your not in the water when it goes dry and the fish are left to die.
 

Geoff Hatcher

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Ohio
What I have run into with other situations and have many many documented (Different sellers, same market). Is that A Quit Claim deed is signed from the investor to the seller at the same time the owner mortgage is signed. It often predates the General Warranty deed to the investor. If they fail to obtain a mortgage. The Quit Claim deed is filed and a release of mortgage is filed. Not sure about this particular instance, one property was deeded from another investor to this one, even though he claims the original owner is the seller on all 3.
 
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PropertyEconomics

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Jun 19, 2007
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Certified General Appraiser
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New Mexico
What I have run into with other situations and have many many documented. Is that A Quit Claim deed is signed from the investor to the seller at the same time the owner mortgage is signed. It often predates the General Warranty deed to the investor. If they fail to obtain a mortgage. The Quit Claim deed is filed and a release of mortgae is filed. Not sure about this particular instance, one property was deeded from another investor to this one, even though he claims the original owner is the seller on all 3.


Yes Geoff that makes sense ... here it would be like a real estate contract with no payments ... in any event .... the deal stinks in my opinion. When one has to get this creative to sell .. they will probably expect others around them to get creative too ... Id rather do them as foreclosures with the original buyer goes broke. Much cleaner appraisals then ... and its probably just a matter of time.
 

Geoff Hatcher

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Ohio
There are thousand of these transfers in these markets over the past five or six years or more. Most do end up in foreclosure within a year or two. Then same people buy em back from the bank, put some paint and carpet in them and the process starts all over again
 

PropertyEconomics

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Certified General Appraiser
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New Mexico
There are thousand of these transfers in these markets over the past five or six years or more. Most do end up in foreclosure within a year or two. Then same people buy em back from the bank, put some paint and carpet in them and the process starts all over again


Sounds like the bankers arent overly smart.
 

Mountain Man

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Jan 15, 2002
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Certified General Appraiser
State
Georgia
This sounds like a "land sale contract" or a "contract for deed". Basically, it's an option to buy. The "buyer" has a contract, but will not get a deed until the loan balance has been satisfied. The buyer is considered a tenant until they pay off the balance of the owner financed loan. This is more risky than a regular loan because if you miss a payment, you or the occupant will be evicted, and you lose all money or rights to the property. Very risky deals, but it's a purchase transaction... try and get a copy of the contract or option, list the owner as who ever is in public records, list him as the buyer, disclose and analyze the contract.
 
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Geoff Hatcher

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Certified General Appraiser
State
Ohio
Ran into one a couple months back, that the Lender foreclosed on $60k mortgage, sold to same entity that was involved in the original flip and made a new $65k mortgage (to an "investor) on the same property a couple months after they disposed of it for $20k.
 
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