Have been meaning to mention a story I authored in last week’s magazine about the rise in so-called “Foreclosure Rescue Scams,” in which unscrupulous individuals or groups approach homeowners facing foreclosure and promise to help them save their homes. In many instances, they convince the troubled homeowner—who is desperate to save their homes—to transfer the deed over to them with the promise that the investor will make the mortgage payments going forward, and the previous owner can rent while they try to rebuild their savings and repair their credit.
You know how this ends: Once the supposed “angel investor” gets the deed to the house, they boot the former owner out—and sell the property for what’s often a hefty profit. Sometimes they comb through tax records for listings of homes whose owners are in default on their mortgage. In other instances, they market their services—using everything from billboards to those little hand-drawn “We Buy Houses” signs you see sticking out of the ground at intersections.
I mention the story because in the week since it appeared I’ve received emails from a few private investors who took me to task for the story. They claim that, in my zeal to take to task the growing number of “foreclosure rescue” scamsters, that I also tarred legitimate investors like themselves who, yes, buy homes from owners facing foreclosure, but try to help the previous owner salvage something from the deal.
But what? This is where I’m stuck. I’ve contacted a couple of the “foreclosure investors” who contacted me, and hope to get back to everyone, but when I ask, “So, give me the details of how one of these deals work,” they clam up. Don’t want to give away their secrets. I had this same problem when I was reporting out the original story.
So if you feel you were wronged, tell me: What are the normal terms of the deals you strike with these distressed homeowners? I’m all ears.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.