A source tells me that some lawyers on the Costa del Sol are up to no good again. Now that their astronomical fees from conveyancing have dwindled to a trickle in the market freeze, they are having to come up with new ways to part clients from their money. This time they have come up with a ruse to sell non-performing mortgage loans as ‘distressed homes’. Investors looking for distress sales on the Costa del Sol should beware.I’m not sure exactly how it works, as it wasn’t explained to me in much detail, but it goes something like this:Banks have clients who aren’t paying their mortgages, and the banks would very much like to off-load those mortgages onto someone else. Lawyers are helping the banks out, for a fee, by finding buyers for those debts. But, so I am told, some lawyers are misleading potential investors by presenting the deal as a distressed home purchase, or bank repossession, rather than an investment in bad debt. So investors think they are buying properties at distressed prices, but in reality they are just non-performing mortgage loans.
There is nothing wrong with investing in distressed debt. Some people have made massive fortunes in financial markets out of doing so. The problem here is that small investors on the Costa del Sol are being mislead into buying bad debts when they think they are buying property on the cheap. I’m told there are various lists of ‘deals’ in circulation from banks which lawyers are using to try and snare investors.
“They are sharks these lawyers, now there’s less work about they are all trying to screw money out of people in other ways,” one estate agent told me.
So if you are an investor looking to take advantage of this market, just make sure you know what you are buying.