Is This A SCAM??
A fellow recently posted this on my local investment club's forum: "I'm willing to pay $10,000 to anyone that will let me use their credit to obtain loans for
properties. I have 3 people that's doing it and they loving it. You will not be reponsible for the property. after the deal close thn property is then tranfered into a landtrust, by doing that the property
is no longer under your name." I KNOW I just read a comment from John Locke about this very subject. I e-mailed the guy, out of curiosity, and he responded. I then asked to talk to the 3 other people that he has doing this and what insures that I would get paid, thinking that if he's legit then he wouldn't have a problem with these questions. This is what his response to that was: " If you don't get paid you could sue me. Beleive me I'm ot trying to get sued from no one. You gonna get paid
no doubt about that. You will have to trust me on his. I'm not here to scam no one. I'm giving you the pportunity to make some money. I'm very confidential
about the people I use. But I will tell you this they're very pleased with the outcome. I am really serious
about this. What I do is find the properties and use your credit to get the loan to obtain them. After the deal close, which take up to 30 days to close, that's
when the money is paid out. I will cut you a check and we will work another deal." Sounds a little fishy.....anyone know anything about this? Is my suspicion correct that this IS A SCAM?? Thanks in advance.
Sounds a little fishy to me too. Why would he need to use your credit instead of his own? Thats what bothers me. Having had my identity stolen a few years ago I am very cautious about who sees my credit report. I would really try to check him out very carefully before you proceed.
LOL-
Is that verbatum what he wrote you???!!!
I love the grammer and good use of the english language.
Amy, I would report this guy to the local authorities without waiting another moment. There was an article here in town not long ago about a guy who was doing this stuff. He milked tons of people of tons of money and basically obliterated some of the downtown condo market due to his scheme. Do NOT give this guy any more information, unless it is done as a sting for the police. Really....I would let the authorities know about this b/c this guy is out to rob people BIG TIME!
Amy,
I would run away from this. It is essentially a sub2 deal, only you are allowing yourself to be on the wrong end of the deal. They shouldn't need your credit, there's plenty of anxoius sellers for him to do business with. Sure you could sue him. You could even win. That's the easy part. Actually collecting a judgement, and having to deal with the negatives on your credit report for the next several years will be the most difficult.
Even if his intentions are honorable, you are the one with everything to lose, and you will have no say regarding what is done. Besides, having your credit tied up may hinder your ability to do business in the future.
Your credit is one of your important assets, Guard it accordingly.
Jeff
Quote:
On 2004-07-10 00:54, jeff12002 wrote:
Amy,
I would run away from this. It is essentially a sub2 deal, only you are allowing yourself to be on the wrong end of the deal. They shouldn't need your credit, there's plenty of anxoius sellers for him to do business with. Sure you could sue him. You could even win. That's the easy part. Actually collecting a judgement, and having to deal with the negatives on your credit report for the next several years will be the most difficult.
Even if his intentions are honorable, you are the one with everything to lose, and you will have no say regarding what is done. Besides, having your credit tied up may hinder your ability to do business in the future.
Your credit is one of your important assets, Guard it accordingly.
Jeff
Jeff,
My credit is EXACTLY what I am thinking about here. I went through a BK several years ago and am just now at a point that I feel my credit has recovered and I it DID not happen overnight! I did not e-mail the guy back after the last e-mail and I'm not going to. I was just thinking he MIGHT have been legit to post on a site that has some very experienced investors viewing all day long. And I also agree with what a previous person stated..about identity theft. I have never had that happen but thought I did when I received a $1300 phone bill that was NOT mine.....scared the %@#& out of me! I usually trust my gut feelings when something feels a little fishy but a second opinion never hurts. Thank you to everyone.
Amy,
The lender is going to come after you if things don't go according to plan, and they often don't. You could sue, but is this a risk you really want to take? Obviously the guy doesn't have good credit or he would do it on his own. If he didn't care enough to keep his credit in good shape I wouldn't trust him with yours. Good Luck,
Delias
I like the grammer. thats the best part. personally i would not trust anybody who uses double negatives in every sentance. Thats just looking for trouble. Anyway, dont listen to anything that guy says.
I have seen this done and can be used as a tool when you have maxed out your credit. Debt to income ratio because of alot of investment properties. After the investor uses there credit to buy the property it is then leased to the other party involved. That person then controls the property and can use a rent to own contract or sell to profit. The investors credit is then freed back up after the mortgage is paid off. This is using other peoples credit philosophy. What loan amount is he looking to obtain for the 10k pymt and for what period of time?
Getting your money back from thugs is something professional people, doctors, attorneys, real estate investors, etc., know will generally bring a low yeild. ( even those who've simply caused harm and financial loss, not just those that stiff their bill. )
Look up the sites for the State Mortgage Brokers Association, The FBI, which will deal through The Internet Fraud Commission, and your Credit Card Fraud Agency, if this was an on-line thing, The BBB, for the Crook's town, who will want you to contact the Federal Trade Commission, also and any Attorneys General, County Attorneys and Real Estate Investment Sites, like this one and warn them about Ty J. Kirkpatrick, Micheal Papp, and any other " Just Listen to What I'm Telling you to do and There wont be Any Trouble" Psychopathic lier, lier, lier, lier, lier, theif, hood, gangster lite-weight, why don't you go to Iraq and blow up our servicemen and women, you Godless Bastard, Terrorist.
How should I put this...
Alan Gross
This is a very good idea for someone to use if they are wanting to buy property and don't have the credit. This technique is not a scam and is not illegal. I can't vouch for the person as any criminal can take advantage of people.
I have a group of a few guys that I pitched this idea to a few months back and they loved it. I essentially did the same thing. They buy the property and deed it into my trust. I never worked out the details because I've got enough deals going right now.
GOOD LUCK
Amy,
Odds are this guy is a scam. Let me tell you how it works:
This requires the co-operation of usually three people (although it can be as few as two). One of the three is usually a mortgage broker. The second is an appraiser the third finds the victims.
Properties in very bad shape or in very bad neighborhoods are purchased, usually a big discounts because of the deteriorated condiditon. The appraiser then appraises the property as if it was in excellent condition, provides comps, etc. Since FHA lenders very rarely or never go check on the property themselves the deception in the appraisal is not caught.
So the money is made in buying $20-30,000 properties and selling them to you for $100,000 (for example). The con will then pay you $10,000 cash (usually in actual greenbacks delivered the day after closing in a brown paper bag) "at closing" out of his $70-$80,000 profit. At first you are very happy. You just made $10,000 in real estate using none of your own cash. They will be willing to close 3 to 5 such deals with you in the first 30 to 60 days. I.e. before the new loans hit your credit report and your debt ratios go to hell.
The victim is very happy. Until about 6 to 8 months later when the NOD's start showing up and the foreclosures hit their credit report. By that time the scam guys will have moved on.
The "investor" who is going to lease the property from you and fix it up will never appear.
Now, how can you tell when this is a scam and when is it not?
1) the con man will offer to pay you your $10,000 "in cash"..
2) the property will either be very deterioriated or has just gone through some sort of distress sale at a figure much lower than you are going to pay.
3) The con man will want to close a bunch of similar deals with you in a very short period of time.
This has been posted here in the past.
IT is called loan fraud, where it appears you are going to buy the house, generally as your primary residence to get good terms and high LTV's. I know a broker that does that. The unfortunate thing is that what happens when the deal goes sour? How do you protect your credit?
Not a good thing I am thinking, now if he was offering partial ownership, etc. it might be a different thing.
[addsig]
You may not be responsible for the property but you will still be for the loan.
There was a group in NC that was using other peoples credit like this. They were paying 5 to 10K to use your credit to buy property. Then they would over finance the property put in a renter recieve the and not make the payment.
Funny, I was just approached with this same situation last night. I asked questions that he couldn't answer, such as "Who would have to declare the 1099 income?" and "How are you (the Scammer) going to report the transaction?". Again, no satisfatory answers! While he is actually helping the preforecloser seller, he is scamming the middle person who exposes thier social security number.
Shame, shame, shame.
Debi
Quote:
On 2004-07-10 20:17, dhambo wrote:
Funny, I was just approached with this same situation last night. I asked questions that he couldn't answer, such as "Who would have to declare the 1099 income?" and "How are you (the Scammer) going to report the transaction?". Again, no satisfatory answers! While he is actually helping the preforecloser seller, he is scamming the middle person who exposes thier social security number.
Shame, shame, shame.
Debi
Debi,
Would you happen to know the guy's name that you were approached by? It may be the same guy.
As a matter of fact, I do....... His name is Kit Hammett of the Portland area.
I did a background and property check on him and found he was in trouble with the IRS, civcl courts and has several judgements against him.
If he had approached me as a money partner, instead of a score person, I probably wouldn't have run away so quickly.
My advice, be careful who you team up with in building your RE business.
Hope no one ever runs into this SCAMMING idiot!!
Debi of NW Oregon
I too am saying be very careful. I was "taken" by a similiar scam. This guy worked Vegas for a while and has moved on to Pittsburg. It is basically a "Ponzi" scam. There were never any real properties, and he never signed a thing. People were left holdind properties worth less than what they owed, plus lost huge amounts of cash.
[ Edited by ttime on Date 05/03/2005 ]
I know alot of people that do this, but they are partners just like if the good credit person had cash. It is a way for 2 partners to make money the one with bad credit (most likely) puts in sweat equity and the other risks their credit. The problem is if the deal goes south the bad credit person is out nothing and the good credit person can no longer be called the good credit person.
Most of the people that do this are either good friends that have a lot of trust or people that are way to trusting.
I personal have builders that have programs were they sell home to investors at a discount, the investor gets a construction loan, the builder leasing the house so the builder is paying the note, but the bank that does the loan is making sure the builder is building the property right is not walking away with cash. Plus the builder has to come out of packet a certain % so it is in the builder best interest to complete the project and get the house sold or they will lose a good amount of their own money. Plus the lender does a very good background check on them.
Yes there are "scammers" out there that are just out to take your money. By the looks of his reply to you, I would say it IS a scam and RUN!
BUT just like a few people said here, this is a very useful tool for people that ARE legit and may have high Debt to Income or had some problems in the past and just got behind (Loss of Job, Divorce, etc). If the contract (Joint Venture Contract) is correctly written and checked by your attorney and you feel comfortable with the person then Do it.
No matter what YOU ARE still obligated for the loan.
A Realtor will be able to provide you with MLS statistics such as inventory in days, total listings, and the all important average time on market. When the inventory and the average time on market starts falling, you know that prices have dropped to the point that people are buying faster than homes are coming on the market. This, in my opinion, is a sign that the market has bottomed out; and barring an economic disaster outside of real estate prices should begain to rise again.
Chris
[ Edited by ypochris on Date 12/01/2007 ]