Foreclosure rescue transactions are viewed widely as scams designed, among other things, to dupe poor, minority, and elderly homeowners out of the equity in their homes. However, foreclosure rescue transactions come in many forms and, as an alternative to foreclosure, often maintain valuable options for homeowners that the homeowners otherwise would lose in the traditional foreclosure process. For this reason, many of these transactions, though imperfect, should be preserved and supported.
This Article introduces one such foreclosure rescue transaction, the residential sale/leaseback/buyback ("RSLB") transaction, into the legal literature from the perspective of the rescue investors. A basic RSLB transaction allows a homeowner facing foreclosure to sell his property to an investor and to lease the property back for a set period at a set rate, while retaining the right to buy the property back at a set price on a set date in the future (a call option).
This Article unveils the logic of these transactions and provides market context, which is often misunderstood and under-appreciated by academics, judges, and the public, who do not understand the value of the transactions to the homeowners who use them and to the communities in which the transactions are popular.
Cori Harvey, "We Buy Houses": A Foreclosure Rescue as the Solution to the Trapped Homeowner Equity Problem, 79 Mo. L. Rev. 371 (2014).