Has anyone seen this:

Here borrowers with comparable homes in foreclosure exchange long-term leases at below-market rent. Then they rely on the tenant-protection law to stay in the homes and allow more time for modification. The theory is if a foreclosed home is leased at low rent, then investors are less likely to buy the home at sheriff’s sale. Some of the comments suggested that the borrower should show up at sheriff’s sale and disclose the lease to the bidders. And of course, they disclose the lease to the bankster before sale. This is an interesting concept to me, except for the modification, which the bank has no more right to do than to foreclose. But at least, it might muddy the waters a bit and give more time for litigation. If this could catch on across the nation, this would definitely cause a moratorium.

I thought it was interesting that the paperwork and the exchange is FREE, but does offer the option of limited attorney help starting at $99. (I am in no way affiliated with this Web site or anyone related to it.)

EDITOR’S COMMENT: I have been aware of this strategy and the fact that people are reporting that it is working. I just don’t know that it will work if it is used extensively. There are a number of possible challenges to it by the “banksters” and it does put you in the position of trying to get away with something by trick instead of being right on the facts and the law. Comments are welcome


11 Responses

  1. Paul,

    You’d have to enter into a new lease agreement with her. You, as the mortgagee can’t be a resident in the home so you wouldn’t be able to live with her.


  2. My girlfriend is already renting from me I wonder if adding her on a least may work?

  3. I’m the founder of First, let me say that our website will be automated by late this week so you’ll be able to download all letters and the lease completely filled out absolutely free. We’ve been doing all the work manually ourselves so far.

    Next, so far we’ve had awesome success as to the first step as lenders have been canceling trustee’s sales when they receive the lease. Now, those homeowners who thought they would have already lost their home are working on getting the lenders to start or restart them on a trial payment plan with the commitment that if they make all payments as agreed the lender will in fact modify.

    You must remember though, that you can’t try to do this if the lease rate is below market. You’ve got to keep this completely in line with the legislation. Next, the lease must be arms-length, it has to be entered into with someone other than your spouse, child, parent, etc. Home Lease Exchange, LLC qualifies as the tenant. Once you enter into the lease, you do not move out of your home. It start only if the bank forecloses and your home is sold at trustee’s sale.

    The lease can be canceled at anytime by either you or Home Lease Exchange and in fact, after the trustee’s sale is canceled, the lease has to be canceled or the lender won’t entertain modification of your loan. The lease can be reinstated though if the lender doesn’t modify. So, you hang on to that leverage during the loan modification discussions.

    Lastly, you must agree that if the lender puts you into a trial plan, that you won’t enter into another lease if you don’t make the payments timely. That’s a decent trade-out though as long as the lender agrees to modify your loan if you do make all the payments timely.

    I hope that helps. Happy New Year to you all. Feel free to email me directly at my personal email and post the email so others who have the same or similar questions or issues can read my answers. You can also call me. I’ll always take your call to discuss your special circumstances or issues.

    Here are two instances where there were special circumstances and Home Lease Exchange was helpful.

    A site user owned her home but she wasn’t the mortgagee. Her husband from whom she was separated is the mortgagee. She entered into a lease with Home Lease Exchange and because she isn’t the mortgagee the bank has to honor her 5 year lease and 3-5 year options to renew at fixed market rent which is below what she wanted to be her modified loan payment.

    Another user bought her home with a all inclusive deed of trust (wrap around mortgage). The made the payments but the former owner didn’t make the payments to the lender. She isn’t the mortgagee either so the lender has to honor her long term lease at market rent.

    Thank you for the nice comments about Home Lease Exchange. They are very much appreciated.

    Michael Levin
    Managing Member
    Home Lease Exchange, LLC

  4. Homeownercan rent half of the house to a friend with a 5 year lease. Then the Homeowner stays in his own house together with the tenant. By that way there is no need to find another home in foreclosure to exchange.

    It would be more difficult to lenders in Florida to refile foreclosure lawsuit as starting Fen 2010 foreclosure lawsuit must be Verified by the Bank attorney.

  5. You may anticipate that whoever claims the ownership of the property will attempt to glom the rent payments. Of course, that sets into play yet another whole set of challenges as to who the proper owner is, with the inherent rights to collect the rents.

    Basically, the evictees are swapping houses and renting back to each other, so you do end up with a bona-fide tenant.

    Ironically, ultimately this is what the bank hucksters are doing anyway: tossing people out of one set of homes, only to “sell” the properties to fresh buyers, who are inevitably the folks displaced from the previous properties. So the banksters are creating a chain of musical houses. except that the new buyers will never have true title, and will be left holding the bag after the title insurance companies all go bankrupt (which is inevitable, absent Federal pre-emptive legislation, which just might happen).

  6. It is my understanding that the lease must be recorded at the courthouse ,, same as the mortgage and that (at least in Florida) it can be for no more than 1 year (renewable). I wouldn’t try pricing it too much below market or the court may find some way to nullify it ,, seeing it as a stunt.

    I can say that one lease I had a hand in (helping a neighbor , bk property owner out of state) was recognized and they did stay on successfully…

  7. It looks like the only way for early termination for the lease is if buyer plans on living in home. If bank buys the home the lease canot be terminated. See….

  8. Interesting, if your spouse is not on the deed, lease the property to your spouse or relative.

  9. Yes, in Va. if you have a tenant living with you in the home with a written tenant lease agreement, they cannot remove anyone. If they Foreclose, they must issue a Unlawful Detain er to remove you. And if they are put on notice that the tenant has a lease then they must let it run out before they can force you to leave.

  10. I don’t see how this can possibly work. The foreclosing party just amends the pleadings to include the tenant, whose interest is junior to that of the mortgagee. Alternatively, the bank forecloses and then reforecloses or strictly forecloses. End of Story, at least in NY.

  11. I think, for the tenant law to work it must be a real tenant living in the home.

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