I was talking with a real estate investor recently and he presented me with an unusual scenario, hypothetical I hope! I’ll change the names just to protect the innocent… so let’s just call this real estate investor, Mr T.

So Mr T is wondering this…. If he finds a homeowner in foreclosure with no chance of recovery and offers to buy the home for $1000 subject to the existing mortgage. He gets the deed and records it, then looks for a tenant or otherwise homeless person to rent the house to with no intention of bringing the mortgage current. Let’s assume for the sake of argument that the home seller and the tenant are fully aware of the situation and they’re ok with it…. although they’re probably idiots, but let’s not ruin our fun just yet.

He rents the house until the bank forecloses and then walks away. The bank will likely offer the tenant a renewal lease or cash for keys to move out. Everyone’s happy?

Maybe I’m having a brain fart right now, but I can’t think of an actual law that’s being broken….. Can you?? I know there’s fraud in there somewhere, I just can’t define it. What law is actually being broken and will this backfire on Mr T ?