Soured Contract For Deed Deal Leaves Illinois Homeowner Out On The Street, Despite Having Never Missed A House Payment

In Knoxville, Illinois, The Register Mail reports:

• The big green house has been purchased by a mortgage company, even though [Amanda] Schwabe kept up her contract for deed payments faithfully for 31 months. Even though she paid homeowners insurance, the property taxes and even replaced a boiler.

• Schwabe’s story is a cautionary tale for those who buy and sell homes through the contract for deed process. “I don’t know what I’m going to do,” Schwabe said. “I’m not necessarily looking for help. I just want to warn other people who get into contract-for-deed situations. They have to be careful.”

• Schwabe moved into the big green home at the end of June 2006, taking over the deed-for-contract arrangement of a co-worker. She signed a new contract with Jim Morgan, the home owner, on Aug. 16, 2006, promising to pay $720 a month for a year, at which time she would take over the mortgage of $67,000 at 9 percent interest. In essence, after a year, owner Jim Morgan’s name would come off the deed and Schwabe would assume full responsibility for the purchase of the home. The transaction was overseen by an attorney John Blake. Crucially, the deed-for-contract arrangement was not filed with the Knox County Courthouse. Schwabe and Morgan insist Blake said he would file the transaction.

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• In February of 2009, Morgan was forced to declare bankruptcy. Since the mortgage company didn’t recognize Schwabe as having a claim on the house, it was foreclosed.

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• The cost to Schwabe? She paid on the house for 31 months — 13 at $720 per month and another 18 at $705 per month. That’s a grand total of $22,050. She also paid insurance bills totaling $3,534 and $1,018 in taxes. Throw in the $4,500 for a new boiler and Schwabe poured $31,102 into the big green house. “The moral of the story?” Schwabe rhetorically asked. “Don’t do deed-for-contract unless you can get a lawyer. And make sure the mortgage company knows about it. Don’t trust that they will have your best interests at heart.”

For the story, see Contract-for-deed deal leaves family homeless.