Of the many options facing people who are dealing with a potential foreclosure of their home, most will eventually hear about foreclosure bailout loans. These types of loans are provided by private investors who will charge high interest rates and provide the necessary cash to forestall a foreclosure. In exchange, they may buyout the mortgage at a loan to value ration of between 65 to 75% and lease the property back to the owner of the home for a period of time.

Eventually, the investor returns the property back to the person in the home. These foreclosure bailout loans are supposed to work more like second mortgages, where the tenant remains the owner of the home. However, sometimes unscrupulous people end up owning the home instead. While there are genuine investors who know how to use this as a last-chance tool to save a home, there are many more scam artists who come into a home pretending to offer genuine foreclosure bailout loans when they are just trying to get the deed to your home. You have to be very careful when signing any documents with anyone claiming to be offering foreclosure bailout loans.

Some states, like Florida, have even put legislation in place that clearly suggests that despite wording in documents, any bailout offers with a lease option are similar to mortgages where the current resident retains ownership of the home. This has kept people from being evicted from a home they thought they owned after going through foreclosure bailout loans programs.

 

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