Ah! So there is where the shadow inventory lies

Normally people post either news articles or rants here. This time I want to post a personal story.

I just got a call from my brother. He lives in the Sacramento area, and is looking to move out of his apartment and rent a house. So he called up a realtor this morning. After telling the realtor what he wanted, the realtor directed him to their web site and told him how to set up an account to look at their listing.

Then things got interesting.

The realtor told him that most of the owners were "60 to 90 days behind" on their mortgage. In order to move in, my brother would need to come up with enough cash to make the mortgage current. At which point the mortgage would then be transferred into my brother's name. No verification that my brother has a job. No credit check.
My brother was a little surprised at this point and asked the guy if this was how people rented these days. The realtor answer him, "We prefer to call it Lease-to-own".

At this point my brother started laughing into the phone and couldn't stop. The realtor eventually hung up.

If this is a widespread practice, and I have little doubt that it is, how can anyone believe that we are anywhere near a bottom in the real estate bust?

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is that even legit?

making someone else's mortgage current, plus "taking over" their mortgage? I mean what's the sale price of the house itself? I imagine in Sacramento they would have to have 50% equity for that even to make financial sense, else someone would be buying a house for more than it's worth.

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A little more information

My brother just copied me on an email he sent to Dr. Housing Bubble about this. Here's a cut from it:

For a nominal fee of $40 I would be granted access to their database of OVER 547 properties in the 95747 zip code. The current owners of these properties are anywhere from 60-90 days late on the mortgage payment. I am suppose to contact the owner to work out a showing and bring the mortgage payment current. At that time the deed and title would be transferred into my name and would assume the loan.
What has just happened was that the length of loan, loan amount, and loan terms have been unloaded onto me and the current delinquent owner is relieved of the debt. No application, employment verification, of income verification was done ... they only ask that I make 2x the asking rental
payment.

This is even worse than the housing bubble days. Of perhaps I should say, this is a continuation of the housing bubble. It hasn't fully popped yet.

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right

but is the equity transferred to the new owner? i.e. to avoid foreclosure they transfer the mortgage but the total loan amount due, is it less than the value of the home?

and can't they refinance or what exactly is the deal with this?
I mean I see the shadow inventory question, no doubt but in terms of real buyers/sellers is this a way to avoid foreclosure and get a good deal for it depends on the terms and total price from what I can tell.

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What this seems to show is

What this seems to show is these loans are still Toxic regardless. It doesn't matter who is paying on them a Neg-Am Opt-ARM with balloon payment will blow up again.

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