Are rent-to-own, or take over payments on pre-forclosures a bad idea or a scam?

Asked about 5 years ago - Los Angeles, CA

Ive seen a lot of pre-forclosure and take over payment ads on craigslist that Ive been warned are a scam. Is this true?

Attorney answers (2)

  1. Richard F Hamlin

    Contributor Level 11

    Answered . If you are thinking of investing in pre-foreclosure property, make sure you do your due diligence, including:
    -Get a title report and beneficiary demand from any lender who shows up on title.
    -Contact the lender(s) to find out what needs to be done to keep the property out of foreclosure.
    -Use a reputable and established escrow company or escrow department of a national bank (I have seen recent cases in which the escrow absconded with hundreds of thousands of dollars.
    -In addition to a licensed attorney, it wouild probably be useful to find a real estate broker who is experienced in short sales.

  2. Donald Edward Petersen

    Pro

    Contributor Level 13

    Answered . All of them that I've seen are scams. They sprout like mushrooms faster than the Federal Trade Commission and the state attorney generals can shut them down. The decline in real estate prices slowed down these types of scams.

    If you are experiencing problems keeping your mortgage current, consider filing bankruptcy AND / OR modifying your mortgage.

    In a city as large as L.A., there are probably attorneys who provide BOTH bankruptcy and loan modification representation.

    There are many non-attorney loan modification scams out there right now so stick with a licensed attorney in your area who has a 'bricks & mortar' office.

    Good luck

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