quitclaim transfer of 5% days before trustee sale

Any ideas about what is going on in this situation? I suspect a foreclosure avoidance scam or a set-up for a post foreclosure scam. Here is the story:

A vacant and uninhabitable house I am aiming to purchase at trustee sale had a quitclaim deed recorded on it days before the first auction date. The auction has been postponed at beneificiary’s request (quite common and probably unrelated). The quitclaim assigned a 5% interest in the house to another person as a gift. The out of state owner is deeply underwater, so there is only negative equity, quite a lot of negative equity.

The owner is part of a group of real estate fraudsters with extensive experience. They should know that the quitclaim action not only won’t prevent foreclosure and won’t save the owner’s credit rating (ha!), but would itself be grounds for the lender demanding payment in full if there were not already a NTS recorded.

My wild guess about a post-foreclosure scam is that the owner is giving a 5% share to a local person so they can occupy the house (ruled uninhabitable by local building and safety, so unrentable) to force a post foreclosure payment of key money, or somehting like that.

Anyone encounter a story like this?

found the answer and the proof - it is a foreclosure preventions scam that “works” by having the recipient of the share of title file for bankruptcy. That might tie up the trustee sale for a while, even in a totally bogus case.

I’ve now verified two cases of this by pulling bankruptcy filings made days after quitclaims were recorded granting 5% stakes. Two different cases. In one case from a year ago, it may have stalled foreclosure for up to a year, even though the bankruptcy case was dismissed in just one month (wrap of final reports took a year).

this looks like serious crime to me: perjury in federal court, falsified records at the county level, conspiracy to defraud the lender, etc.

Wow! Thanks for posting this info. It sounds like there should be some new legislation soon on this issue. I just wonder why the homeowner agreed to this is they are not living in the property or do not have it rented. I wonder what their motivation would be??