Reverse Quit Claim Deed?

[Hyuma Leland]

I am looking into becoming a private money lender for a real estate investment company who secures their loans by placing the lender as the 1st lean position and uses a "Reverse Quit Claim Deed" to avoid the necessity of foreclosure proceedings. I have not been able to find out any information on what a Reverse Quit Claim Deed is or how it functions...anyone have experience with this or know where I can find out more information?

Thanks!

[Account Closed]

I think the RE company made up that phrase in order to make potential borrowers feel secure. They want you to believe that by giving you a deed in advance that you could record if they defaulted would avoid foreclosure. That's not how it works. All kinds of liens can attach to title after you make your loan and secure it with a mortgage or deed of trust. If your borrower defaulted, you would only accept a deed in lieu of foreclosure if it was to your advantage. You can't know that in advance. Lenders refuse deeds in lieu every day.

I'd tread carefully with any one wanting to borrow that is using a "reverse quit claim" as a selling point.