Real Estate Ripoff?  What can I do?
wuffmn
56 Nevada, USA, writes:

I need some advice.

An publicy-traded real estate investment company bought 2 houses from me subject to existing financing.  In the contract I have with this RE company, they agreed to make timely payments on the mortgages, HOA fees, etc.  They also agree to transfer the mortgage into their name after 6 months, or 6 months from date prepay penalty expires.  One of the houses loan has NO prepay penalty.

Our agreement was signed on 11/17/06 and recorded 11/21/06.  Therefore, if they have not removed my name from the mortgage via selling, refinancing, etc., they will be in default on the contract.  They also have been late with the mortgage payments EVERY month.  They have not yet made payments for this month (it is now 4/21), and I fear they will not make them before end of month (thus ruining my credit) and may stop making them altogether.  They also have not paid all HOA payments.  They are clearly in default of our contract, and I will likely sue them and win eventually.  Their company, according to their SEC filings, has many millions of dollars in assets (mostly real estate).

Now my question is this.  Is there anything (other than making the payments out of my pocket - which I can't) I can do to save my credit?  If the payments are not paid, foreclosure will begin.  With the declining RE market, the houses now have no equity. . . would sell for less than mortgages.  Will the bank ask me for the difference in what they sell the houses for after getting it REO, and the amount on the mortgages?  Are my other assets (residence, savings, etc.) at risk of being attached by the bank?  What happens if I contact the lender L/M department and tell them I sold the properties subject to?  If they call the loan due, nobody pays, and foreclosure begins - do they go after the owner of record (company I sold to S2), or do they go after me?  Lesson learned for the future, but is there any hope for my situation?

Scambuster:
An unfortunate situation indeed. . . just shows that you can't always trust even a publicly-traded company.  The bank can ask you for the deficiency, but likely will not.  It is possible that your other assets (except your residence for which you have filed homestead).  If you tell the bank you sold the properties, they will probably call the loan due if it is not being paid.  As long as it is being paid, they usually do not care.  If they call the loan due, you will have 30 days before foreclosure proceedings begin.  In foreclosure they go after you who signed the promissory note on the mortgage.  Your best hope may be to pursue legal action against the RE company who breached its contract with you.  By the time such a lawsuit is settled, your houses may have already been auctioned off in foreclosure.   Your credit will unfortunately suffer as a result of the foreclosure, but you can take the steps to rebuild it afterward.  You may be able to use the explanation that you were a fraud victim which caused the foreclosure, when you begin to make the comments on your credit file.
 
 

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