While your intent is okay there are some vagaries that need to be answered. Most important is, are you talking about San Diego or not? Also while you appear to be quite altruistic, if you are talking about helping people out I am assuming you would purchase the home first, then basically rent the home back to the previous owner correct?
So, if that is the case then you would be purchasing the home at trustee sale. I will say right now that our group is almost at a complete standstill because we have found the trustee sale path to be to competitive as margins are quite small. If your intent is to hold the property for quite awhile then you are okay. However know that you will need to do quite a bit of legwork. If you are thinking you can pull this off with a few hours a week then you are sadly mistaken and you will piss most of your money away. Also I concur with an above post that you may find after awhile that your current owners could not pay the mortgage and they will very likely fall behind on rent so you will end up evicting and getting new tenants. More time, and more money. If your goal is simply to flip that is fine just know that margins are quite thin nowadays.
One thing you may want to learn more about is trust deeds.
Alternately if you are looking at buying a home as a short sale, then renting it back to the original owner, I cannot comment on whether or not that constitutes fraud or not. If you think you can get a short sale, then relist it and resell it and still get margins…. well… good luck with that. Maybe last year you could have however the market has slowed considerably and I think more times then not you will lose money.
Again, all this is predicated on San Diego as well. I don’t know about other cities. I think you need to clarify your goal a little bit more and I could make a better recommendation. Buying and flipping right now is scary at best. You are about 2 years late to that party and right now everybody is into it and people will be getting burned unless you do it right. The best chances are ULTRA low end where you buy it, major rehab and sell it. Other side of the coin is high end and hope the high end doesn’t crumble while you hold it. Just know on the low end you will be competing against guys like Don Rady and people that have good crews, can rehab homes quick and own brokerages so they soak up all those costs.
