The lending practices of the last few years have not been appropriate. The lenders are learning their lesson now, with all the foreclosures. But, the bottom line is that it is the individual consumer who has made the mistake. They made the decision to purchase a home, on hopes and dreams, not on financial analysis, or projecting in the future on the possible reality of their situation. It is easy to just blame the banks, Realtors, or private investors as greedy, or predators. Each person, or company has to take personal responsibility.

     A "sell and rent back" deal is something that can hurt the homeowner when they "wake up" and realize what they have done.  The same home, they once owned, they are now renting.  Many will get "fuzzy" in their memory, and suddenly feel they were "duped" out of owning their home at a stressful time.

    I am working with a person now on trying to solve the problem with the payment affordability on her home. The adjustable rate mortgage has adjusted up, and with the second mortgage she has on the property, her payments are $1600 a month. This is on a home she bought three years ago for $105,000. The first mistake was choosing an adjustable mortgage. The second mistake was getting a second on the house. At the least, it would have been better to refinance, and get a fixed rate with cash out. Well, what is "done is done". She has been trying to sell the house for over a year. But, the house needs some repairs. She did not spend the second on the house repairs and improvements. I have made sure she has been working with the bank on her options. She had worked out a forbearance agreement, but is now behind on that. She cannot file bankruptcy because she had one not too long ago.

     The best option for her now is to have me try to get the bank to accept a "short sale" of her loan amount. This can only be done by a third party, not the homeowner. If this works out, I will purchase the house, and she will move on, and her credit will have some dings, but not the major strike against it of a foreclosure. Now, I know she would love to stay in her home, but this is not a good option. What usually happens is that the person gets behind on their payments for rent, then they have to be evicted anyways. The other scenario, is that the previous homeowners have a reverse in fortune, with a higher income. They quickly forget the stress they faced before, and how this wonderful person, the investor, helped them out. They are still living in their beautiful home, but no longer own it. What often happens is that now that it is a brighter time, they decide that the person who is now their landlord is evil, and they may sue and try to state they were taken advantage of. This would not be a good situation for anyone involved.

     In some cases, I may offer to rent a lower price home, or a mobile home to them if one is available, but never the same home they owned. I try to help the distressed homeowner to view every option they have besides selling.  I want to do the right thing for them, and myself.  But, some solutions that could work, if it was a perfect world, leave too much of a risk open to be accused of fraud.

     I wrote this article originally on the site called Helium.  If you enjoy writing on any subject, you might want to join Helium.  You get paid too!

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