Q:        I own an investment property in Fort Lauderdale FL that has been in foreclosure for the past several months.  I have gotten dozens of letters and flyers from lawyers and investors asking me to short sale, which I had been strongly considering, but recently I was approached by an investor offering to give me $5,000 cash and take over mortgage payments on the property.  It sounds shady to me, but the investor insists that it is legal and that it would benefit me by protecting my credit rating by helping me avoid foreclosure.  Is this too good to be true, as I suspect it is?

A:        If it looks like a duck, walks like a duck, and quacks like a duck … it most likely is a duck.  Is this a shady proposition, YES!  That’s not to say that this particular investor is looking to defraud you, but the good just does not outweigh the bad in this situation!  One of the problems with this arrangement is that most mortgages include a “due on sale” clause that states that if there is a change in ownership, full payment of the outstanding amount of the loan immediately becomes due.  Because of this, most investors that offer to take over mortgage payments typical leave the property in the name of the borrower and make the mortgage payments on behalf of the borrower.  Now while this could have a positive impact on the borrower’s credit score, seeing as the mortgage payments are now being paid on time, if the investor begins missing payments, the original borrower then absorbs the negative effects of those missed payments.  Also of concern is the threat of other types of liens which could be filed against the property and possibly any other property that you, as the borrower, owns.  For example, if the investor contracts with a roofer to put a new roof on the house, but fails to pay this contractor, that contractor could place a lien on the property.  This lien would then attach to every property that you own in Broward County, including your primary residence.  The same can happen with code enforcement liens as well should the investor fail to maintain the property.  That does not sound like it is worth $5,000.  So, if you would still like to pursue the safer option of a short sale or if you would like to know the other options that you may have, just give us here at the Law Office of Brian P. Kowal, PA a call today at (954) 990-7552 and allow us to continue keeping your best interest in mind!