Is this a real estate scam?

[lemonhead]

me and my husband are currently current on our loan but are unable to make our house "sellable" for anyone to get a mortgage and will be facing forclosure in May when we will no longer be able to make our payments:

Now, a solution has come up from someone who we do not personally know but was reccomended to us as extremely trustworthy and legitimate...we have known of his business (and of his family) for several years.
Basically the suggestion would be that we would keep our deed, but would hold a contract that has been notarized and filed with our city that this person has assumed our mortgage until the property is sold, in which the deed will then transfer to the next property owner.
They make the mortgage payments, they make the repairs neccesary to sell the house and they get their investment through the sale of the house. We would be free of the house, and keep our good credit. Ideally. We would also maintain control of the deed until the house is actually sold.

Aside from the obvious benefits and risks, is there anything we are missing here?

[yyyyyy]

get thyself a real estate attorney

[src50]

That sounds very much like a scam.  Your lender is the only party that can allow an assumption of a mortgage - a "notarized contract" doesn't change that.

[golferwhoworks]

scam as if your note is not assumable and most are not then it triggers the due on sale clause in your deed of trust. Think about it what is in it for them to bring your house up to snuff and sell it and keep the profit what if there is a loss in this whole deal.

[v_b]

Well known scam.  It can destroy your credit.

Think about it.  They are offering to sort of buy your house without actually buying it.  Ostensibly, they are offering to do a short term loan (the mortgage payments and repairs) and wait until the house is sold to get their money back.  Their "interest" would be if the house sold for more than you owe the lender.  They want you to LIE to the bank and potential buyers, are telling you that a notarized "contract" covers you and the them equally, etc.

In reality, they won't pay the mortgage.  They won't make the repairs.  They will take that "contract," other false documents and use it to  refinance the house (that they don't own).  They will run away with the money and you will find you owe even more than when you met these people.

[One_Step_Ahead]

ASK THEM TO MEET YOU AT YOUR ATTORNEY OFFICE, AND YOU WILL SEE IF THEY EVEN SHOW UP!

[frak1a12345]

This idea stinks even through cyberspace.  I don't believe you have all the facts straight.  Some where in the mess of paperwork you have to sign will be a contract or power of attorney giving them the right to sell or refinance your house.  They will take the money and run.  This has happened before.  Don't do it!!
The dead giveaway is the fact that they can not assume your mortgage.  They would need the lender's permission to do that and no lender will allow that.  "Notarized" and "filed with our city" are both red herrings to distract you from examining the paperwork too closely.  Don't do it!!

[Steven_B]

maybe not a scam but someone who doesn't truly know the in and outs of real estate finance. you don't want to do for so many reason
especially why your not relieving yourself of the problem(debt) just trying to pass it to another .whom your basically deed over the home which they can do with as they choose.or at least their portion of it.and still not encumber them self with the existing debt.also the current lender might have a non assumability clause in the existing deed(loan).which they can enforce if you try this which they probably will never know .but why take the chance especially if there going to record the document.but try to modify remember if paying more than 40 % percent of your o\income to the mortgage your may qualify

[Landlord]

You are missing the fact that this is not even close to legal.

You are being scammed.    Even if the scammer thinks he is doing the right thing he is setting you up for a federal fraud conviction.

[onlywholesalehomes]

This is not a scam if done correctly.  I am a real estate investor and I have done many deals like this.  You can get an attorney involved to set an escrow account with instructions for payment.  You can make sure that all payments are made to the banking institution through this escrow agreements.  You can do this through a title company, a real estate attorney, or a number of companies on the Internet.

As for the purchase contract and due on sale clause, it is perfectly legal to assume someone's mortgage.  In AZ it is written into the AZ Board or Realtors real estate contracts as a means if pruchase.  Check you states real estate purchase contracts, and I am sure you will see something similar. 

Now will it trigger a due on sale clause?  Possibly.  If they catch wind of the transaction, they may trigger the clause, but in todays market, as long as the payments are made, they probably will not do anything.  If they do catch wind, mostly likely a letter will go out, most likely to the investor letting him/her know that the triggered the clause.  The investor will have sometimes 6 months or more to refinance the loan or sell the property.  In todays market with all of the REO's, they will probably bend over backwards to get it fixed before they followed through with any foreclosure process.

Of course if you wanted to add more complexity to this, the investor could place the property in a land trust, and the bank would never find out the situation.  This is an investor tool to help in these situations.

Keep in mind, this is all 100% legal and is done every day.