Today we want to provide a creative financing scam update to our May story “Creative Financing Red Flag Alert”.
Since May creative financing offers have increased in frequency, and they’ve become more creative. Additionally, after presenting their offer the callers have become more tenacious and downright combative with the listing agent.
More Creative
Since we wrote about how the “Subject To” can violate your lenders Due on Sale Clause, investors have changed the way they present their offers. One investor is hyping their offer as no risk because it is not “Subject To” at all but rather wrapping the mortgage to give the seller full protection. Whether you wrap a mortgage or not, it still may violate the original terms of the loan.
Furthermore, a seller is still reliant on the investor making the payment. If the investor does not make the payment, the seller may have no recourse to get their home back and be obligated to make the full payment of the loan. In a wrap-around mortgage, it’s possible for recourse to be created, but a seller might have to go through a lengthy legal process all the while mortgage payments need to be made. If the investor placed a tenant, the seller would have to abide by those terms as well.
Legal Advice
We would highly recommend a seller speak with an attorney before accepting any kind of creative financing offer. If they tell you you’re off the hook when you sell to them, look harder. Accepting a creative financing offer may prevent you from purchasing another home because you still have a loan in your name. They don’t tell you that, or they sometimes mislead about this fact.
The Ellis Team is looking into adding language into the listing agreement such that we have authority to reject creative financing offers for our sellers.
Agents Beware
These investor groups are so skilled and convincing that we’re afraid inexperienced agents, and perhaps some experienced agents may fall for some of the claims made over the phone, and in emails.
We have had sellers call their attorney and their lender. In each case, they were told not to engage in the offer before them.
I’ve even had investors point out that it is my duty to present all offers, and question why I wouldn’t want what is best for the seller?
Creative Financing Scam Update
As a service to the community, I will post screenshots of the written correspondence on our Blog. I invite attorneys and lenders to comment on the language. I will take out the address of the property and the names of the sender. It is our hope that you will begin to get a feel for what is happening out there. Please seek your own legal advice. We are not attorneys and are not offering legal advice in any way. We are simply informing you about a topic you might want to investigate before taking action should this happen to you.
Considering Selling?
Please call Brett Ellis or Sande Ellis 239-310-6500 at Keller Williams Realty. We can answer your questions and guide you through the real estate maze. Changes are everywhere, and you need an experienced agent to guide you through the process. Or get your home’s value for Free at www.SWFLhomevalues.com
Good luck, and Happy Selling!
Creative Financing Ehibits to View
The following are actual emails or offers we’ve received for you to view. We have blamked out who sent them and the property to protect privacy.
If for any reason you cannot open these links, leave a comment and I will find another way to share them. We are using Google Drive to share, but not sure if we can share outside of our organization