This Isn't a Real Investment Company

Jessica and her husband sold their home to an investment company. The company has been making the payments but lagged on them in the last few months. The mortgage is still in her husband's name.

QUESTION: Jessica in Raleigh and her husband sold their home to an investment company because it was in another state and her husband is in the military. The company has been making the payments but lagged on them in the last few months. The mortgage is still in her husband’s name. Dave tells Jessica they’ve created a mess.

ANSWER: You’re screwed. Whoever’s name is on the mortgage is getting trashed. Your husband is getting trashed just like he’s living there and not paying the house payment. Besides that, when the mortgage company finds that you’ve sold this house, they’re going to call the loan. Then they’re going to foreclose on you. What you’ve done is—it’s not illegal from a criminal perspective, but it’s in violation of your contract with them. You’re not allowed to sell a house without the mortgage being paid off or approved. When they find this, they’re going to call the loan. That’s not good, and they’re more likely to find it now that these goobs aren’t paying the payment and you’re not either. And you don’t have any control because you don’t own the house anymore. You’ve already given the title over.

What I would do is get them on the phone one more time and tell them that they either need to deed the property back to you today, which is preferable, or tell them to expect to be sued the next time they’re one day late on the payment because you’re not going to tolerate this anymore.

This is not a legitimate investment company. Legitimate investment companies don’t do deals like this. This is somebody who learns some technique for buying nothing-down real estate at a weekend seminar somewhere. That’s why you’re dealing with a “she” and a “her” and “him”—this kind of stuff. This is somebody running this deal out of their basement. It’s probably the guy’s wife you’re trying to get a hold of or something.

I would very firmly and very strongly suggest to them that if they don’t want to be sued, they need to go ahead and deed this property back to you. Then you’ve got control again and you can either keep it rented or sell it straight out. I would rather you lose money, write a check, and not have the mortgage anymore this time when you sell it. But don’t ever do this kind of a deal again. You gave up control of the asset, and you kept the liability.

Your two options are to rent it or to sell it. By sell it, I mean sell it with the mortgage being paid off. That’s the direction you’ve got to decide. But I’m going to go ahead and get her on the phone and do my best to force her to turn the property over to you. If she won’t, then the next time she’s late, file suit on them. That day. And have an attorney prepared and ready to do that to force them to turn it over to you. If you can’t get the thing back in your name, this is going to go on and on and on. They’re probably not even making money on this is part of their problem. Their little thing they were told how to do at their weekend seminar didn’t work out for them. They’ve screwed you in the process with their ignorance. They didn’t mean to probably. Probably. I’ll give them the benefit of the doubt.