2nd Mortgage Scam
Have you ever heard about the 2nd mortgage scam? This scam involves buyers, sellers, real estate agents, mortgage lenders and a few others.
Allow me to use an example to explain the 2nd mortgage scam. Also for the sack of ease, I will us small numbers.
A buyer sees a house on the market for sale at $100.00. So the buyer decides to contact the real estate agent that is selling the house.
The buyer then explains to the seller that he will be able to pay for the house after he has taken out a mortgage. The buyer makes the offer and the seller accepts.
Off to the mortgage lender the buyer goes. When he gets there, the buyer is informed that he has to make a $60.00 down payment in order for the mortgage to be approved.
The buyer explains that he does not have that amount of money at the moment. At this point the lender explains that the buyer can still get the mortgage, but with a little help from the seller and the real estate agent.
The seller agrees to do this scam. However, the seller may not be aware that this is a scam.
The seller is asked to put the house back on the market, but at a higher price. In this case, let us say that the house is not at $200.00. So the buyer then puts in an offer for the $200.00, but the $100.00 is still valid. The $100.00 is now considered a first mortgage.
This second mortgage now puts the first mortgage in a better ratio rate. Therefore the "large" down payment is no longer required.
This transaction, in most cases is not recorded within the law. This action is fraudulent and it is punishable by the courts. If you are a seller and you are approached by any to do this, please do not agree to it. You will be guilty of committing a 2nd mortgage scam.
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