Not often, maybe once a month I get calls from folks buying investment properties where the transactions don’t make sense. I’m sure many in the mortgage business get such calls and some get caught up in the story and can’t see through the BS.
I recently took a call from an individual who was looking for a construction loan. He told me that he was a builder and owned a building lot, valued at $82,000, that had no debt against it. He wanted to get a mortgage to put up a modular home, the total cost would be $200,000.
He seemed forthright, by telling me that his credit was not sterling and he would be willing to pay a higher than normal interest rate if I could get the loan for him.
I told him that I had a lender that would do this loan for him, based on the information he has supplied so far. I told him I needed him to bring me the following: The deed to the lot that he owned, two years of tax returns, two months of bank statements—personal and business and any retirement/investment accounts.
He came to the appointment with everything except the deed. He then proceeded to tell me that he hadn’t taken title to the property as yet, as it was under contract for $60,000. So, how are we going to pay for the lot, since you don’t show enough money to pay for the lot. He told me that the seller was going to carry the entire debt, as a second mortgage, after the construction loan closes.
I then told him, I wasn’t willing to do a mortgage for him. He stood up and told me that I wasn’t making a smart decision. I won’t tell you what I told him.
Unfortunately, this crap goes on all the time. It is also unfortunate that some in this industry would do loans that are fraudulent. If done knowingly, hopefully they get caught, as there is no room for these crooks. They give the rest of us a bad name.
By: Ann Fulmer
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