Interesting story by Dan Stockman in Sunday’s Fort Wayne Journal Gazette entitled “Which price is right?” It’s a real estate shell game where a guy gets an option to buy a property from A, arranges a sale to B at a higher price, then B makes his mortgage payments by “selling” it back to the guy who doesn’t have his name on any sales documents. The parties involved swear up and down that it’s perfectly legitimate. All I know is that I’d be sweating an awful lot if I were one of the “B”s like they describe in the story with a million dollars in mortgages, trusting that I’ll be able to make the payments each month solely on the basis that the fellow who arranged the deal was a “really good guy.”
Of course that’s the point, Doug. YOU would never be a “B” because you are a responsible person who pays his debts and has a basic understanding of real estate value. That is why you would not be involved in this type of scheme.
Many of the B’s are either unsophisticated buyers or people with a less, shall we say, RIGOROUS sense of financial responsibility, and they end up defaulting on the mortgages. That leaves the mortgage company holding the bag and the neighborhood suffering the effects of abandoned, decaying homes in their midst.