Things to notice when buying a CFD

[Michael Vaughn]

I was recently sent a tape of only CFD loans and I am trying to understand the difference between that and a regular mortgage.

From what i understand the difference between a CFD and a regular mortgage are (correct me if I am wrong) Are:

• If the borrower defaults it does not matter how much money he paid so far, he loses the house
• It is more easier to take possession of the house in a process called forfeiture (unless a certain amount of time has passed in some states, then a normal foreclosure is still needed)
• Usually these houses will be in worse shape, worse neighborhoods then it would have been was it a normal mortgages since the people who take these loans could not have taken a normal mortgage, hence they are not doing well financially 

Are there any special things to look for during the due diligence phase of buying a CFD that are not done with a regular mortgage?

[Chris Seveney]

@Michael Vaughn

Those assumptions are not always true. There are many states where a land contract is treated like a mortgage and must be foreclosed upon.

You should make sure you thoroughly understand state laws prior to buying a CFD.

CFD's are also much higher risk than notes since you are on title, if there are county violations they typically go against your company and if you own other property in the county the lien can be placed in ALL your properties.

I could go on for months on CFD's including the good and the bad. Very rarely does it end where you are getting a property back with a ton of equity in it