Went to do an occupancy check for a pre-list and offer cash for keys. Property is occupied by a contract for deed holder who claims not to know that the property has been foreclosed. He is in the process of refinancing the property and per the original owners instruction (the mortgage holder foreclosed on) has been making payments to Mortgage Company ABC for the past few months and has cancelled checks to prove it. Well it turns out that Mortgage Company ABC is also the one supposedly working on his refinance (which by the way has been "almost done" for the last 2 months). The loan officer admitted knowing about the foreclosure, but didn't know that the redemption period expired. They are telling the occupant that he does not have to move and that they will just change his loan from a refi to a purchase and to ignore the eviction and cash for keys. My bank client says no way. He has got to leave, but is welcome to make an offer on it once it is on MLS.

Now this poor guy is totally confused, has no where to go and wife is having a baby in 3 weeks (which coincides with the eviction - which has now been started). He's been making regular payments on the house the whole time and has made improvements to the property.

Is the mortgage company scamming him? I'm thinking they probably bought the property from the original owner during the redemption period, subject to the existing financing (or lease option) but never recorded anything (they don't show up anywhere on paper). They represented themselves to the contract for deed occupant as the owners new mortgage company and have been collecting the rent. Anybody else have any ideas?

I've been very nice with the occupant but made it clear that my client now owns the property and the eviction has been started and that I can offer him cash for keys only for a limited time. Any other issues he needs to take up with the other parties.

The part that really sounded scary was when the loan officer told me she does "this kind of deal" all the time and that she had done over 500 transactions and has 10 others in the work at the moment(hope she was exagerating).

Interested in hearing some comments? Thanks

He needs to get an attorney involved.Sometimes if they have been paying for awhile credit challenged borrowers can purchase the house as a refianance which is much easier to qualify for than a traditional loan.This mortgage company sounds very close to what is called "equity skimming".They are taking payments on a property they do not own and not paying the mortgage leaving the property to foreclose on the homeowner.You just stumbled upon a renter,it will be much easier for your bank to see if this renter has the ability to purchase,if he doesn't then you have to evict.

I would report this to hud on that mortgage company to at least follow up and see what's going on int his case.

not giving legal advice