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Sale And Rent Back Arrangements Increasing

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Foreclosures Force Britons to Ponder Shift to Fixed Rates

LONDON, Aug. 22 — Susan Whittaker was desperate. Four years ago, she purchased her first apartment in the town of Rochester, less than two hours east of London. But then interest rates started to rise, and the income from the small shop she ran with her partner no longer covered their adjustable-rate mortgage.

In British society, “we encourage people to take on debt,” said Frances Walker, a debt adviser.

Facing foreclosure, and determined to avoid moving in with her mother, Ms. Whittaker found a way out in an increasingly popular arrangement here known as a “sale and rent back.”

A private company bought her home, allowing her to avoid foreclosure; then the company rented the house back to Ms. Whittaker and her partner and they did not even have to move.

The catch is that the company paid the couple less than the value of their apartment.

Such deals are uncommon in the United States, and mortgage brokers say they discourage them because of the possibility of unscrupulous and dishonest lenders exploiting distressed homeowners.

But desperate times call for desperate measures. While Americans fear an epidemic of foreclosures, brought on by the subprime mortgage meltdown, Britain is already suffering one.


Selling to rent is one thing, but selling your home for only 75% of "market price" to rent back must be a tad soul destroying. Is it as widespread as the article suggests or is it simply lazy journalism? :huh:

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