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Real estate fraud 101: Would You Know It if You Saw It?

By Patrick following x   2018 May 24, 9:18pm 586 views   2 comments   watch   nsfw   quote     share    


• Equity Skimming. Equity skimming happens when a buyer who wants to take out a large mortgage convinces the seller to re-list the house for an extraordinarily high amount (for instance, twice the original amount) so that the buyer can obtain a larger mortgage from his/her bank. Often times in these situations, the buyer will take out the larger mortgage, pay the seller the original asking price for the house, and then disappear with the rest of the mortgage money. The house usually ends up in foreclosure as a result of this scheme. ...

From 2007, but very relevant to today.
1   HeadSet   ignore (1)   2018 May 25, 6:19am   ↑ like (1)   ↓ dislike (0)   quote   flag        

Equity Skimming sound like a theory. What bank will approve a loan on home marked up to twice the going rate? Loans have to be appraised, you know. Granted, some appraisers will hit the mark a little higher for a well qualified buyer, but nothing close to twice the market. This skimming scam would only work if the seller was willing to take only half the houses market value. Despite all the late night TV infomercials, banks make it real hard to "cash out" on a home when you buy it.

Something similar did happen with the FHA 203k loans back in the mid 90's. This poorly thought out process was designed to finance the purchase and repair of fixer upper homes. The problem came when the loan allowed the borrower to finance in the profit. For example, one could get a loan for $100k, purchase the house for $50k, put $20k into fixing it and put the house on the market with a assumable $100k loan. The program was discontinued when companies bought multiple houses, did minimal repairs, and let the houses get foreclosed. This crap would not happen if the loans we not government backed.
2   MAGA   ignore (1)   2018 May 25, 11:45am   ↑ like (1)   ↓ dislike (0)   quote   flag        

Real Estate fraud? What do you think the "R" stands for in fraud?

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