Creative Financing?
Hi all;
I recently met with a lender, who is part of an “investment team.” I wanted to get pre-approved for possible purchases of reo’s or other deals that may come up. He has pre-approved me for the purchase of up to four single family homes, to be purchased within a 30 day period. The plan is to use four separate banks for the loans and due to the time it takes for the new loan(s) to appear on the credit report, the 2nd lender would not know of the 1st and so on. In addition, I would state that these would be for my primary residence to get the best rates (interest only). I would put 20% down on each using my heloc or a bridge loan from private lender and then take out a 2nd using a home equity on each house and subsequently pay back the bridge loans. Anyone ever heard of this? Legal?
Any input is appreciated.
BTMJAP
This is not legal. When you fill out an application for morgage you are required to state all existing morgages. Therefore, even if a mortage you just received from the bank down the street the day before doesn't show on your credit yet, you are still legally required to disclose it.
If something happened and you were forclosed on, the bank would go after you claiming that you filled out a fraudulant application since they could say that had they knew about the other mortgage, they would have never made their morgage with you.
Sounds like that lender is part of an "investment team" of crooks. What he's advocating is fraud...
usually you fill out a mortgage application whereby you declare all your liabilities weeks in advance before a loan is closed. in this case this app has been filled out already with 4 different banks...so he is not lying on the app...if the application asked are you intending in securing other loans within 30 days then you must answer honestly...i havent seen one yet that asks that...the only thing that you can get in trouble is the primary residence thing...if you have no intention in occupying the premises then you are lying...so you may want to move yourself in while you rehabing to get past the requirement...
years ago i did several "under the table " type deals. what ever i took to make the deal i lied about income,debt, prop. owned, insurance, ect. i never did anything that hurt anyone i called them little "white" lies. any time i thought about or talked about the deals i felt like a lair. so many years ago i stopped. now any time i do a deal and someone suggests any "under the table" deals and i say " no i'm not doing any thing dishonest" it seems to give me more power in the deal or maybe it just makes me fill good about myself that "now' i am honest . let your conscious be your guide........kenmax
I guess you may have some escape on the multiple loans, if you apply for all 4 at the same time, then none are approved yet, an you don't have to list... may depend on the application. You are still doing it in bad faith. Don't do them as "primary residence"... outright fraud. The could call the loans, also puts you in a tight spot on the insurance, if you carry appropriate insurance they may notice its not a homeowners policy, if you carry a homeowners policy, in the event of a loss the insurer may deny a claim. You may want to consider going legit, if the bank thinks its to much risk, they may be right.
Hey,
Do you want to know why the Attorney Generals of different states are coming down hard on REI? Because of crap like this.
Do you want to know why most people think REI are nothing more than clever criminals trying to steal their houses? Because of crap like this.
Do you want to know why you have to sign dozens and dozens of pages at closing? Because of crap like this.
Do you want to know what FHA requires seasoning? Because of crap like this.
Do you want to know why banks are getting more and more aggressive and restrictive on investor loans? Because of crap like this.
Do you get the point?????
Illegal activity like this hurts EVERY single one of us. Don't try to justify it or come up with some clever way to think you are operating inside the law...you are not.
Thank you all for your replies. Prior to my posting, I had requested additional information from the lender and had met with a client of his that did what he had proposed for me. It was all disguised as taking advantage of "loopholes" in the system. I, of course, was skeptical. Hence, my post. Commercialtalking, you were correct in saying that I was so exited about the propspect of owning four properties that I was actually considering committing(obvious) fraud. However, the exit strategy was to hold & rent. The numbers were very favorable and enticing. I was looking to put red on red and black on black to get a jump start on my REI. Anyway, I hadn't heard from said lender for days in response to my direct questions, including the legality of it all. I did today. It seems that just last week all the lenders he was using for my transactions had suddenly changed thier requirements for "owner occupied" loans. They were no longer available. Me thinks that someone on thier "team" may be monitoring this site. So be it.
Again, thanks for all the responses and yes, Bruce, I get it.
BTMJAP