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Saturday, October 13, 2007

Saturday Slumming

by Tanta on 10/13/2007 12:51:00 PM

In an attempt to keep my mind off of M-LEC, I decided to don a Hazmat suit and go see what those mortgage professionals over at Broker Universe are up to these days. I feel obligated to share this with you.

This is just a beaut:

Who can do Seller Carry Back Loans ?

In August 2005, husband and wife purchase a condo in San Mateo County, CA. for $400,000., and got 100% financing.

They did not occupy the condo, the wife’s brother moved in and he has been paying the mortgage, taxes, and HOA fees from the beginning.

The condo now has an appraised value of $460,000.

The total mortgage balance owed on the condo is $399,000.

The husband and wife would like to sell condo to the wife’s brother.

Can sellers do a 10% carry back, and let the buyer get a 90% purchase loan ?

Loan amount would be $414,000.

Who will do the 90% purchase loan ?
The good news is that, so far, no lender representative has responded to this offering to get screwed. The bad news is that, so far, no lender representative has asked for the broker's real name and state so that the lender can make sure this character is on all "debarred" lists.

The thing I really like about this scenario is that, while the odds are very good that parts of it are untrue, it's even worse if you assume it's all true. I mean, it's probably just some run-of-the-mill liar with a fake appraisal wanting to get out of a bad "investment." But imagine if it were true: there's a couple out there who "bought" a condo without risking any of their own money in down payment. They managed to sucker the brother into carrying the mortgage and all other ownership expenses. Now that they at least believe that the unit has appreciated by 15% in two years or so, they would like to extract that appreciation from their own relative by having him in essence assume their mortgage to get them out of any liability, plus pay them $15,000 out of loan proceeds, plus sign a note requiring him to pay them the balance of the "appreciation" over some period of years, with interest.

In Broker America, this is apparently considered a perfectly legitimate transaction.