Bill and Betty Smith live in a home and a have an adjustable rate mortgage with a bank. Three years in, their rate adjusts. Bill has lost his job, and the local market has turned down. So they don’t have the income to support their payments anymore, and they don’t have enough value in the home to sell it for what they owe. A realtor is involved who is trying to sell the home on behalf of the Smiths, and help John Doe – who cannot qualify for traditional financing – to purchase it. The realtor calls THE GUY, and he comes in and purchases the property for what is owed on the existing note, getting the Smiths out of the house. Then he sells it to John Doe for more than that amount, and essentially becomes the bank to John Doe. THE GUY collects a monthly payment from John Doe, which is in excess of what is owed on the Smith’s original mortgage – which is still in place. THE GUY applies part of those proceeds toward making the monthly payment on the original note, and makes a profit on the difference. In addition, THE GUY holds the deed on a property that is appreciating in an improving market, and part of the loan documents with John Doe includes a covenant requiring him to refinance the note with a bank within either 2 or 3 years. When that refinance takes place, based on the appraised value of the house, THE GUY makes a profit on the difference between what is owed on the original note and the refinance amount.
Aaaannd.....Discuss. Where can I find some ammo to shut THE GUY down?