Loveland Family Loses Home
To Lease-To-Own Scandal
LovelandPolitics Special Investigation
Loveland - October 31, 2009

Ever wonder what happened to predatory lenders who made money by
pushing unsophisticated couples into exotic loans for homes they couldn’t
afford?  The newest real estate gimmick spreading quickly across the country
may prove the old adage of once bitten twice shy isn’t really true when it
comes to real estate.  

Late night get rich quick gurus are peddling the Lease-To-Own scheme as the
latest secret to making big money in real estate using foreclosed properties.   
Unfortunately, many people who already lost their dream of owning a home to
exotic financing schemes are falling prey to the Lease-To-Own gimmick putting
them even further away from achieving their goal of home ownership.

This is because the failure rate of Lease-To-Own contracts is very high and
when the deal falls apart the “buyer” loses everything.  Similar to the Land
Contract scams of the 1970’s, the Lease-To-Own scheme puts only the buyer
at risk while the investor and their partners earn a higher than market rent and
receive a hefty non-refundable deposit.  If the renter does find the means to
purchase the property it is often at 50% over the price the agent just paid for
the same property from an investor only days before the option to purchase is
exercised.

This is because the person who signs the lease option isn’t necessarily the true
owner of the property.  In many cases the leasing agent is in cahoots with the
owner but legally not able to encumber the property with a lease or sales
agreement.  Therefore, the contract is unenforceable since it isn’t with the
owner of the property.   The owner and leasing agent can decide later whether
or not to honor the agreement depending by how much profit they can get on
the sale of the property.


Loveland Family Evicted From Lease-To-Own Property

LovelandPolitics special investigation has uncovered one operation in Northern
Colorado that offers a “Lease-To-Own” contract that according to the tenants
wasn’t signed by the owner of the property.  In fact, it appears
Homes By
Shepherd is advertising homes for lease with an option to purchase that it
doesn't own.

If you go to the
Homes By Shepherd website, you will see a list of local
properties listed as “inventory” that are not owned by the operator Marty
Hutcheson or the company named on the website.

This means anyone signing a lease and contract to purchase the property with
this company or its representative may not have an enforceable agreement.  
Imagine discovering this after you have given them your money and moved into
the property?

That is exactly what happened to one family after paying a large deposit,
excessive monthly lease rate, and living in the home located at 1662 Saulsbury
Court in Loveland.  What is worse is they spent many hours and considerable
costs in restoring the formerly vacant and foreclosed property to livable
condition.  The reward for investing their life savings and many hours of hard
labor?  An eviction.  The true owner of the property, Poudre Investments LLC,
served them with legal papers ordering them to leave the property.

The explanation provided for the vacancy order, according to the family, was
the owner lost his financing so their Lease-To-Own agreement would not be
honored.  To the tenant’s horror, they discovered that Homes By Shepherd
and the person who signed their Lease-To-Own contract were not the true
owners of the property.  Since the initial contact was made through the
Assemblies of God Church in Ft. Collins the family felt comfortable enough not
to research property records before signing the Lease-To-Own agreement.

For the record, the family’s name is not included in this story as they have
decided not to “go public” in hopes of receiving the money back they lost in the
Lease-To-Own scheme from either Marty Hutcheson or the property owner
who appears to be his business partners.   

The family being evicted referred to Marty Hustcheson as a real estate broker
but no record could be found by a LovelandPolitics inquiry of anyone by that
name holding a broker’s license in the State of Colorado.

A common problem with Lease-To-Own scams and schemes is the operators
are often providing advice in leasing and buying property not to mention credit
advice but are not licensed real estate brokers or mortgage brokers.  
Therefore, victims cannot file complaints with any licensing authority or initiate
ethics investigations when they feel cheated.

According to several sources, the proprietor of Poudre Investments LLC  
Mark Goldstein alleged he was completely unaware of the Lease-To-Own
scheme his apparent business associates obligated the property under located
at 1662 Saulsbury Ct. in Loveland.   This is difficult to understand as he has
purchased a number of houses from foreclosure auctions being advertised on
the
Homes By Shepherd website which were later sold to MTJ Investments
and sold days later by MTJ Investment presumably to the lessees (see graphics
upper right of this page).


Why This Kind of Lease-To-Own Scheme Is bad For Buyers
national website exposes Lease-To-Own Scheme Problems

It is very unlikely a home buyer can gain financially from using the Lease-To-
Own option because the property is often only offered for sale at higher than
market value.  If, however, the market value of the property dramatically
increases during the time the buyer is living in and fixing the property, the true
owner (who has no agreement with the tenants) can simply renege on the
Lease-To-Own contract and kick them out.  The family living on Saulsbury
Court went to court to protect their interest in the property only to discover
they had none.  They have now rented a home in Weld County.

Please feel free to comment -
Anatomy of a Loveland
Lease-To-Own Deal
information taken from Larimer County
records
LovelandPolitics.com
a non-partisan, not for profit, news website reporting on Loveland, Colorado.
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Below:  Three Loveland houses advertised on Homes By
Shepherd.  Notice the high mark-up (red) the house is offered for
sale while the price paid by the investor is blue.  There is no
inherent financial advantage to buying a home that is over priced.
3 Simple Rules To Buying Real Estate

1.  NEVER buy or sell real estate without a licensed real estate broker
and title company or a professional attorney
(preferably representing you).
 

Ft. Collins Board of Realtors
Loveland/Berthoud Association of Realtors

2.  Always check with Larimer County public records to see who is the
actual owner of the property and make sure any agreement to purchase or
option to purchase is with the real owner.

http://www.co.larimer.co.us/assessor/query/search.cfm

3.  If you are in a Lease-To-Own contract,
visit the Larimer County Clerk Recorder and
ask to have the agreement  
recorded on the
title of the property.
Claims By Local Lease-To-Own Operations

Freedom Property Solutions LLC
Loveland, Colorado

"When you buy a home from us you can move in quickly and easily. Most of
our properties are available immediately. Get into one of our homes in just a
few days with our flexible owner terms or set a date further out.  Compare
that to buying an owner occupied home through an agent. How frustrating!"
Source:
http://www.freedompropertysolutions.com/custom/indexda8b.html?id=123774

Homes By Shepherd
Ft. Collins, Colorado

What We Do...
Shepherd Home Services, LLC believes in partnering with potential home
owners and tenant-buyers. We offer homes through Larimer, Weld, and
Boulder counties on a "Lease with Purchase Option" basis. This means that
those who would normally be renting year after year, throwing money away
paying for someone else's home, can become part of a program that will lead
to personal home ownership and an improved financial future.
Source:
http://www.homesbyshepherd.com