All Forum Posts by: Dylan Douglas

The issue with investors getting involved with an owner in foreclosure, here is a post from our BP forums Feb 14.

It's how you go about it and what the buy strategy is. Andrew, you said "how I can save them from this fate" since there is federal law specifically addressing folks claiming they will save people from foreclosure, those words should never be uttered in a letter or otherwise to anyone facing that ordeal.

Offer to purchase, out right, with cash or financing is fine. If you appear to be counseling these people and you don't have a HUD license or you're not an attorney, you can be violating the law. You can't advise, counsel, claim you'll save them, or talk about any strategy to avoid foreclosure.

If you do anything that makes an insured lender believe a property is being sold and they put off a sale, (generally they won't) and you fail to close, with them seeing your deal was some convoluted assignment deal, you have then interfered with the foreclosure process, a violation.

Some states are judicial states, highly likely that owners with equity will have or have at least talked to an attorney. Others certainly speak to attorneys, they also seek out other lenders to refinance, they speak to non-profits that advise in credit matters. Few with equity in a home sit on the couch and never utter a word to anyone and just wait to get kicked out. You never know who people have sought advice from, including internet forms.

Liability; a ruthless type losing a home could very easily claim that you were responsible for delaying them from seeking other alternatives if you fail to buy and close. They may get more out of you than from a sale!

There are things to avoid, if you are not skilled in negotiations and are unaware of the violations of various laws you can step on it, something that newbies should not get involved in, IMO. You can't really follow some script when an owner starts asking questions or they go into the "this will save us from foreclosure" talk, as you can't go there. If anything, I'd first give them a disclosure to the contrary upon learning from them they had such issues. I'd never approach them, cold, with the fact that I was aware of their situation as it is irrelevant to me asking if they are willing to sell.

Dropping a letter on their a$$ about saving them is a bad way to go now. IMO. This just takes you into an arena full of scammers that are being cracked down on, you may have great intentions, but if you fail or clog the process or don't perform it will be easy to get tagged as a scammer and suffer the consequences.

I know what gets said in these situations, I've been on both sides as a lender and buyer many times over the years. :) 

Here is the route to be an approved : 

http://portal.hud.gov/hudportal/HUD?src=/program_o...

Interference with banking operations; you submit a bogus sale contract, such as in wholesaling, that can become interference in a foreclosure.

Investors can fall into these matters unintentionally through their negotiations:

http://www.doj.state.or.us/consumer/Pages/foreclos...

My concern is not for those skilled investors who are aware of what they can say, it's the newbie who isn't aware of what not to say, so much in fact, it's simply better for newbies not to go there. Too much risk and not enough reward. :)