Mike South writes on www.mikesouth.com: The thing is, when I first heard about this I thought that I recognized the con, it was common enough and anyone who read a paper or watched the news heard about it, and what makes it even more interesting is President Obama is now proposing the federal government do the EXACT same thing.
What happens is pretty standard, a mortgage broker or someone working with a mortgage broker looks for someone with a distressed property, someone about to be foreclosed on. They are easy to find because foreclosures have to be published before hand. Then they had to find someone with a little cash and good credit to sell the idea to.
The idea being that the purchaser can save the property from foreclosure by buying it from the owner. The owner then rents the property from the new buyer, often the agreement would be to sell it back or make it a lease purchase or some other deal. It’s sold as a can’t lose because of the way property prices were skyrocketing.
The mortgage broker gets a nice commission on the sale, then often convinces the new purchaser to refinance the property sometimes for even more than it is worth, again making a nice commission.
The broker may also be the one who collects the rent from the original owner, all for a fee of course…and that rent often never made it’s way to the new owner.
So now that you understand that, lets look at what happened here. Kayden purchases the home but never gets the required rent, either because the broker kept it or because the initial problem that the homeowner wasnt making his payments was still a problem. So she cant keep up with it and the plummeting housing prices and market forcing the house into foreclosure.
So initially it looks like she might be a bad guy and gets charged with a felony…that is until the prosecutor sees her records and the fact that the rent payments werent made…her felony charge gets dropped, she didn’t profit from the transaction, matter of fact, she lost money and she has the IRS audit along with all the documentation from that year to prove it.
So who is still charged with a felony? The brokers…you figure it out.
Kayden gets a misdemeanor for not having a rental contract with the homeowner.
So Kayden, it wasn’t hard to support you, I knew what had happened, what was hard was keeping quiet about it so as not to jeopardize your case. It’s all over now and it’s behind you.
People who read this will understand now, it wont change the mind of some of them but it certainly should be understandable by anyone who can read a paper.
What really concerns me is now Obama is proposing that the federal government buy properties in foreclosure and rent them back to the owners…..
Does this sound familiar?
