Vantage paid Rinks $9,000 in cash, with another $1,000 due when she moved out of the home.
“There’s a very strong secondary market for redemption rights,” says Dunne, adding that he recently advised a client who sold redemption rights on his soon-to-be-auctioned home for $50,000. “They are useless to homeowners, but they have a lot of value to investors.”
Why are redemption rights such a hot commodity? Dunne says it’s a result of decisions handed down by the Oregon Supreme Court in 2013. In effect, these rulings required lenders to give homeowners six months to redeem their homes after foreclosure.
“For investors, redemption rights have become a real issue,” Dunne says. “Now the investors go out and buy up redemption rights from people who are losing their houses.”
The result is that investors are pre-emptively knocking on the doors of those few properties in foreclosure that appear to be promising investments. Rinks’ home on Southeast Reedway held exactly the kind of promise investors seek. A floral-printed “Welcome” flag flaps over a porch with a floral-printed mat that also says “Welcome.” A well-tended garden is highlighted by Russian sage and rosemary.
Rinks declined to comment.
Shortly after Rinks sold her redemption rights to Vantage Homes, another investor, Daniel Radtke of Remedy Real Estate LLC, walked up her garden path. Rinks, a divorce lawyer, answered the door when he knocked.
“She seemed nice, and she seemed smart,” Radtke recalls. “And the house looked like it was in good shape, although I only saw the living room.”
Radtke paid Rinks $4,000 for her redemption rights—which an owner, by law, can only sell once—not knowing she’d already sold her rights to Vantage Homes.
In all, records show, Rinks sold her redemption rights to five different companies in the days before her home was auctioned, pocketing $20,500.
Radtke says Rinks stopped communicating with him after taking his money.
“She doesn’t answer the door,” Radtke says. “She blocked my email and hasn’t returned my calls.”
At auction Sept. 29, Vantage Homes bought the house for $216,500—less than half what Rinks owed. Because Vantage owns the redemption rights, it can start to work flipping the house right away.
The other four companies that bought the rights? They’re out of luck.
Dunne, the lawyer, says he hasn’t heard of other instances of multiple rights sales. He expects the Oregon Supreme Court will eventually reverse its requirement that flippers give homeowners a second chance: “This whole market for redemption rights will go away.”
As for Radtke, he filed suit against Rinks in small-claims court Sept. 30.
“Things happened pretty quick,” he says. “She told me she was only selling to me.”
This story appears in the Oct. 21, 2015 print edition as "Redemption For Sale."