We are in an upside-down mortgage (own $180,000, worth $165,000), and desparately need to move. We have spoken a group (Texas Capital Home B...

Question

We are in an upside-down mortgage (own $180,000, worth $165,000), and desparately need to move. We have spoken a group (Texas Capital Home Buyers) who is offering to take over our monthly payments, along with all responsibility (taxes, insurance, up keep) for 12 to 18 months. They then match someone who does not yet qualify for a traditional mortgage, that person lives in the home, makes the payments, and has a chance to improve their credit. Once their credit is better, they refinance the house and the mortgage would be out of our name. Is this a scam??? Is there a catch? Thanks for any help you can give!!

Answer

There are a few common problems with this scenario:

1. If you deed your property to someone else, then you have violated the bank's "due on sale" clause. Though banks rarely enforce this, it's still a risk.

2. What are you going to do if you've deeded the property, but the company doesn't pay the bank? It's your credit on the line, even if you deed the home to another.

3. What happens if the couple with bad credit pays the intermediary company, but the intermediary doesn't pay the bank? It's still your credit on the line.

4. What happens if the no-credit couple trashes the house?

If the thing falls apart, the bank will still foreclose, and they can sue you if there's a deficiency (i.e. the house doesn't sell for more than the note.)