Couple panics, and loses family homestead!

New York Newsday puts it this way: “Carol and Anthony Calvagno said they just weren’t thinking straight three years ago when the solicitation from Southern Star Mortgage came in the mail.”

The Calvanos were in big trouble with their mortgage because Anthony had lost his job and they used equity in their house — which had been in the family for 60 years — to pay the bills, running up $128,000 in debt which they had no way of paying.

When Southern Star learned that the Calvanos could not qualify for a refinancing on their own, it offered them a “sale and lease back” deal under which the broker bought their home and mortgaged it, leasing it back to the Calvanos for $1,300 a month. Under the agreement they were supposed to have the right to buy back their house in two years.

In principle these agreements are useful in some situations, but they are fraught with danger if your goal is to keep your house. They should be used only when there is no other choice and they should never, ever be done without a good lawyer!

The Calvanos had no lawyer and no protection and they might have been screwed even if the brokers had been honest, which, apparently they were not. According to Newsday the brokers never made a payment on the mortgage.

The bank foreclosed on the brokers, and sold the house at auction. The Calvanos are now being evicted.

If you are in a situation like this, or know anyone who is, I recommend that the first lawyer you talk to is a bankruptcy lawyer. Depending on your situation they may be able to help you keep your house and get back on a decent financial footing in much better condition than you would be with a sale and lease back.

If that does not work for you, get a good real estate lawyer to review any other agreement you might consider!

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