Washington Foreclosure Rescue Victim Fights Back
In Washington State, KIRO-TV Channel 7 in Seattle reports a story of a Lynwood family facing forecloure who was approached by a forecloure rescue operator with an offer to help them "save" their home through a sale leaseback arrangement. In such an arrangement, the operator takes title to the home, and the financially strapped homeowner rents it back with an agreement to buy it back from the operator in the near future. Unfortunately, things didn't work out as expected.
Seattle Attorney Melissa Huelsman has filed a complaint on behalf of the family against the operator contending the entire deal was set up to fail from the beginning. For more, see Hazards Of Foreclosure Rescues.
Go here for Channel 7 video describing types of foreclosure rescue.
Washington State is one of the states that I know of that appears to have plenty of case law (albeit somewhat old) that could support the proposition that these foreclosure rescue, sale leaseback arrangements are nothing more than secured loans / equitable mortgages that are "clothed" or otherwise "disguised" as an absolute transfer of title. As such, the financially strapped homeowner would still be treated as the "true owner", even though leagl title may have been purportedly transferred to a rescue operator through the execution of a deed. Further, the only way that a rescue operator could get ownership and possession of the home in this context is through a foreclosure sale, and not through eviction. Unfortunately, many operators are getting away with obtaining possession through eviction, only because there are not enough private attorneys around with the expertise to handle these types of cases. Hopefully, the Washington State Attorney General's office takes a look at this.
In one case with what seemed to be an egregious fact pattern, the Washington State Supreme Court refused to rule that a sale buyback arrangement was anything other than an equitable mortgage. The court stated, "To hold otherwise would permit the exaction from [the property owner] of usurious interest or defeat his equity of redemption and force him to relinquish his rights in the real property without consideration, which would be unconscionable." Phillips v. Blaser 13 Wn.2d 439, 125 P. 2d 291 (Wa. 1942)
For a summary of some of the Washington State court cases that treat financing arrangements that require financially strapped homeowners to sign away the deed to their home as nothing more than secured loans / equitable mortgages, see:
Seattle Attorney Melissa Huelsman has filed a complaint on behalf of the family against the operator contending the entire deal was set up to fail from the beginning. For more, see Hazards Of Foreclosure Rescues.
Go here for Channel 7 video describing types of foreclosure rescue.
Editor's Note
Washington State is one of the states that I know of that appears to have plenty of case law (albeit somewhat old) that could support the proposition that these foreclosure rescue, sale leaseback arrangements are nothing more than secured loans / equitable mortgages that are "clothed" or otherwise "disguised" as an absolute transfer of title. As such, the financially strapped homeowner would still be treated as the "true owner", even though leagl title may have been purportedly transferred to a rescue operator through the execution of a deed. Further, the only way that a rescue operator could get ownership and possession of the home in this context is through a foreclosure sale, and not through eviction. Unfortunately, many operators are getting away with obtaining possession through eviction, only because there are not enough private attorneys around with the expertise to handle these types of cases. Hopefully, the Washington State Attorney General's office takes a look at this.
In one case with what seemed to be an egregious fact pattern, the Washington State Supreme Court refused to rule that a sale buyback arrangement was anything other than an equitable mortgage. The court stated, "To hold otherwise would permit the exaction from [the property owner] of usurious interest or defeat his equity of redemption and force him to relinquish his rights in the real property without consideration, which would be unconscionable." Phillips v. Blaser 13 Wn.2d 439, 125 P. 2d 291 (Wa. 1942)
For a summary of some of the Washington State court cases that treat financing arrangements that require financially strapped homeowners to sign away the deed to their home as nothing more than secured loans / equitable mortgages, see:
- Equitable Mortgage Doctrine In Washington State
- Equitable Mortgage Defense In Homeowner-Tenant Evictions - Part 8
equitable mortgage yak
posted by Home Equity Theft Reporter at 9:37 AM
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