When facing foreclosure or eviction watch out for contract for deed

[annm4peace]

Northern Value LLC evicting Mpls family from home of 25 years for delinquent $83/month contract-for-deed payment

“I have offered to pay them three times the normal payments to get caught up,” said Nafeesah. “When I talked to the lawyer, he told me frankly, ‘they don’t want your monthly payments, they want to flip your home.’”

http://www.occupyhomesmn.org/northern_value_llc_evicting_mpls_family_from_home_of_25_years_for_delinquent_83_month_contract_for_deed_payment


A housing court judge ruled Thursday that Nafeesah Abdullah McReynolds-El could be evicted by the contract-for-deed company that owns her home--even though she had been told her sheriff sale was delayed until January 2014. Nafeesah faces a summary judgment hearing Tuesday, and after that could be evicted in as little as 24 hours.

After a medical condition forced Nafeesah Abdullah McReynolds-El to cut back on work, she struggled to make ends meet, sometimes delaying medical treatments or doctors appointments in order to pay the bills. The family survived in this precarious condition, from time to time running into problems with the mortgage company or back taxes with the city, until Nafeesah’s husband lost his full-time job and the family slid into foreclosure.

Since working with Occupy Homes MN, Nafeesah’s lender, Midlands Mortgage, delayed her sheriff’s sale until January 2014 to enter into negotiations with the family. Nafeesah could afford to pay for her home if the mortgage company lowered her monthly payments. Thinking things were starting to get better, Nafeesah was shocked when she received an eviction summons because of delinquent payments on her contract for deed.

For twenty years, Nafeesah wrote two checks: one to the mortgage company and one to a third party owner of a contract for deed. When the mortgage company stopped taking payments, which is standard process during a foreclosure, Nafeesah stopped paying her contract for deed as well. She intended to work out a payment plan with the contract for deed owner, who had personal connections to the family.

During this time, the contract for deed on Nafeesah’s home was sold to Northern Value Group, LLC. Nafeesah only owed around $8,000 on the contract; she was about $2,000 behind. Northern Value LLC immediately terminated the contract-for-deed, and prepared to evict Nafeesah and her family. Unlike foreclosures, a contract-for-deed has a two-month redemption period, meaning Nafeesah needed to hand Northern Value Group $8,000 cash virtually on the spot. Northern Value LLC never offered Nafeesah the option to make reasonable payments on the contract.



“I have offered to pay them three times the normal payments to get caught up,” said Nafeesah. “When I talked to the lawyer, he told me frankly, ‘they don’t want your monthly payments, they want to flip your home.’” On Thursday, a Hennepin County judge confirmed that Northern Value LLC had the right to carry forward with an eviction. When Nafeesah goes to court on Tuesday, she could be ordered to leave her home that day.

Contract for deed agreements have a notorious and dubious history as being an efficient vehicle to swindle poor people out of their homes. “I know from Minnetonka, where their office is located, Northern Value LLC might think my neighbors’ homes in South Minneapolis are real estate gambling chips, but they’re mistaken,” said Occupy Homes organizer, local elementary school teacher, and neighbor Chris Gray. “I’m tired of seeing gentrification rip apart the fabric my community, people of color kicked out so faceless rental agencies from wealthy suburbs thinking they can run venture-capitalist real estate schemes in my community.”

Nafeesah is ready and willing to make increased payments to pay off the contract for deed while she is negotiating with her mortgage company to get a modification. “I live in the Eviction Free Zone, where nine homeowners facing foreclosure are organizing neighbors to fight for our community’s right to have a say in what happens to our homes,” said Nafeesah, “Northland Value LLC bet on the wrong horse. They saw a free lunch. They were wrong. I’m not moving, and hundreds of my neighbors stand with me.”

[Lee-Lee]

1. Wow

I had never even heard of this. I worked quite a few evictions, but nothing like this sort of bum deal.

[ellenfl]

2. must be a mn scam. never heard of contract for deed in my years in the r/e law business. eom

[sandpan]

3. Really?

"Contract for Deed" is a.k.a. "wrap around deed of trust", "land contract" and "installment sales agreement". Contract for deed has been around at least 30 years (probably more) and used in most states, although rarely in California. This instrument/contract is not recorded and therefore, very risky.

[annm4peace]

4. 15 years ago when I lived in Ca

my co-worker bought his home from someone using the contract for deed.

He had a friend who had bought his home that way. This was in Madera, CA. I didn't own a home or know what it was at that time.

[Lee-Lee]

5. I have heard of land contracts here in NC

But never where a person has a land contract and a traditional mortgage.

Every land contract I have seen here is Party A buying from Party B on a land contract, and the property stays in Party B's name until paid in full. Those can be very risky if the seller dies, goes to prison, or even loses a lawsuit and has a judgement against the property.

But I have never heard of a situation like this, where a person has a mortgage and another contract on the property.

[Yo_Mama]

27. The mortgage must be left over from the original owner

And this lady has been paying on it.

[ellenfl]

6. i guess it's a state difference. all real estate contracts in fl have to be in writing and

deeds and mortgages are recorded in the public records. if someone has a contract secured by real property that is not recorded, they would have to sue to compel payment. anyone who borrows against their home in excess of the value deserves to become a renter.

according to what i read, the owner does not get the deed until they've paid for it under the contract for deed. how can anyone get a conventional mortgage if they don't have a deed?

[uncle ray]

8. you don't, you make payments to the owner.

it's often a way of mating up hard to sell properties with buyers who cannot currently get a loan. the buyer makes payments to the seller who maintains deed, for a short period, at the end of which the buyer must find financing, or walk away from their investment. some part of what they pay the seller is considered a down payment to help secure financing. it's basically owner financing.

[ellenfl]

9. but the homeowner in the op had a mortgage.

we do owner-financed property transfers all the time. the one in the op also had an institutional mortgage, apparently on a property not yet owned.

[DirkGently]

31. Or a species of wraparound?

One person is essentially paying another person's mortgage payments?

We have something like that in FL called a "South Florida refi" but it's basically considered mortgage fraud.

[flvegan]

11. In Florida, it's called an Agreement for Deed and they get recorded.

In Florida, it's very difficult to get a conventional mortgage on one and even more difficult to get a title policy on. That said, I have seen them, though I think many (if not all of them) were done in error.

[ellenfl]

12. what part of florida has such a document? in 25 years in so fla, i have never seen one. eom

[flvegan]

13. All parts.

I've been in title insurance for 20 years and have seen them numerous times, all over the state.

[ellenfl]

15. i've been a real estate paralegal in palm beach/martin county for 15 years

and have never seen nor heard of one.

[flvegan]

16. As an underwriter, I'm not surprised.

Though I find that sad.

[ellenfl]

17. for whom do you underwrite? eom

[flvegan]

18. I'm

not interested in disclosing for whom I work.

[ellenfl]

19. so you don't work for a title insurance agency? do you write contracts for deeds? eom

[flvegan]

20. I wouldn't insure one, so no.

[ellenfl]

21. so what's so secret about the title insurance company u work for? eom

[flvegan]

22. See post #18. eom

[ellenfl]

23. so much for your credibility. eom

[flvegan]

26. Learn how to examine title. Maybe you could find what you've never seen. eom

[ellenfl]

28. i have examined title and prepared policies on a daily basis for 15 years.

before that i worked in lending for 20 years. still have never seen one.

[flvegan]

29. Sigh.

Palm Beach, right? Martin, right?

Both Palm Beach and Martin have their own designation for document type, Agreement for Deed. I believe one is AGD and one is AD. Go poke around, see what you find.

Even though you questioned my credibility, I'm going to stay civil about it. Have a nice night.

[Crepuscular]

7. The contract for deed

or land contract is not recorded but typically, at least in Michigan where land contracts are used frequently, a memorandum of the land contract is recorded with the register of deeds, which provides some legal protection for the person purchasing on a land contract. Most land contracts in Michigan have a recorded memorandum, to allow the purchaser to take advantage of some property tax benefits that come with primary home ownership.

Nothing nefarious about land contracts, they are simply a vehicle for selling or buying property, the same way a private mortgage is. I've both bought and sold properties using land contracts. As with any real estate purchase or sale, the consumer is well advised to seek legal counsel and have any legal documents, including installment sales like a land contract, reviewed prior to signing.

In the case described above, if the contract for deed was in place prior to the mortgage being obtained, it's doubtful that it was ever disclosed to the mortgage lender, as they would likely not have financed a property with an underlying security lien against it. If the contract for deed occurred after the mortgage was in place, it probably violated the due-on-sale clause in the mortgage and depending on what the equity position that the home owner had, may not have been legal.

[ellenfl]

10. wouldn't a lien search/abstract have revealed the contract for deed or lack of

ownership? i can't imagine that important a legal transaction being so loose. i bet the lender comes out whole.

[Crepuscular]

14. A title search would

only disclose the presence of a prior land contract if the contract or a memorandum had been recorded. Barring that, it would not show up in any official record.

But failure to disclose an existing debt against the property would violate the terms of the mortgage and likely result in it being accelerated. You can bet that the mortgage and note were recorded, so the mortgage lender will be in first position. What the contract for deed company was trying to do was call the contract and then sell the house for enough that they could pay off the underlying mortgage debt during the redemption period of the foreclosure and then keep any additional proceeds. Whether they could make any money depends on the amount of the mortgage and whether the current owner is under water or not.

[NaturalHigh]

24. Some friends of ours were evicted a few months ago.

I won't get into all the dirty specifics, but it was a screw-job by their bank from the start.

[annm4peace]

25. gather your friends and neighbors and fight back

check out what Occupy MN Home is doing.. they can offer advise.

If more people fought back, it would be harder for banks to foreclosure but it takes solidarity

[annm4peace]

30. update: the petition is getting traction. please sign and shae.

Nafeesah's petition is really taking off! Please sign and share. After her housing court hearing Tuesday, she could face eviction in as little as 24 hours because North Value Group LLC, an investment company in Minnetonka, would rather flip homes than keep families in them. Nafeesah has offered to pay 3x her normal payments to catch up, but they'd rather kick her out of her home of 25 years to gentrify south Minneapolis.

http://start2.occupyourhomes.org/petitions/midland-mortgage-co-negotiate-with-nafeesah-abdullah-mcreynolds

[annm4peace]

32. update from yesterday

In eviction court today, Nafeesah convinced the judge there were issues with how Northern Value Group LLC served her eviction papers! The judge ordered another hearing for Friday at 11 am to examine the issue of service. We shall not be moved!

Please support and sign the petition;
http://start2.occupyourhomes.org/petitions/midland-mortgage-co-negotiate-with-nafeesah-abdullah-mcreynolds