As a Real Estate agent, I’m a bit ashamed to admit that when it comes to foreclosure, I only had one scenario in mind, that is the owner stops paying his/her
monthly payment to the bank and therefore, at one point, the bank would foreclose on the property.
Well, I have seen with my own eyes that at least another scenario exists, and therefore, most probably several others as well.
The one I have seen evolved is a out-of-the-country owner, owning a property bought with owner financing.
Actually, as a German resident, there is no way for him to get bank financing in the US. You already have a hard time to get in a mortgage broker office
with a 700 credit score and a solid job these days, so imagine a foreigner without any credit here.
Obviously, you will have to have some specific ingredients to successfully foreclosed a property with this recipe.
First, you have to have a property that is free and clear and willing to sell it with owner financing. The higher the down payment you get, the better.
But stay attractive in terms, as the interest rates and so on. The deal will be to steal the deed – and therefore the property – as soon as possible and repeat the process.
Secondly, you need to find a buyer who will live as far as possible of the property location. In this case, the buyer was German and is living in Dusseldorf.
Since he bought the property as an investment, he didn’t come in the US regularly to check the property,which was managed by a rental management company.
This is how you will need to proceed.
You are receiving your check on a monthly basis. However, one month, you will not cash it or deposit it to your bank account. You just put it in your drawer
and let it there. Just deposit the 2 or 3 next months though. Then, all you need to do is publish a notice of default in the local newspaper, 3 weeks in a row. Your far away buyer will most likely never read the local newspaper anyway.
You record your notice of default at the city hall and set a date for foreclosure sale on the city hall steps. That day, you take ownership of the property.
You will notice the rental management company that you bought it as a foreclosure and need to have the property out of their program.
The management company will call the German owner, stunned in his Dusseldorf sofa.
Rinse and repeat for more profit.
Legally, it’s solid. While my German client is seeking US lawyer’s advice, at this time, very few thing can be done. It’s just too late.
Now, don’t make me wrong, THIS IS WRONG AND SHOULD BE PUNISHABLE BY LAW. But the procedure is legal.
So, I’m still wondering how many possibilities are out there to foreclose on a property. Maybe still a few that I can’t think of for now…
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