If You go and refinance your home that's not selling and borrow as much as you can with the intent of later telling the bank you can't afford to keep making the payments and the bank simply takes it back and you keep the money you borrowed and hide it somewhere and then simply file for bankrupsy. Is this legal? and if it is do you think this is moraly correct?
2007-12-12 12:59:21 · 4 answers · asked by wdsrt410 1 in Business & Finance ➔ Personal Finance
Well, under normal circumstances you can't really get too much money out of the bank during refinance. Normally banks limit the amount of equity you can cash out. If you try to cash out to more than 80%, the terms of the loan are getting severly worse. So basically, you could not sell your house to the bank for the full value. Having said that, I have to admit, that there is a known scam, where a mortgage broker and borrower and an appraiser get in to a conspiracy and severly overprice a property and then do a cash out transaction with intent of not paying the mortgage and simply walking away.
This is a scam and it is very imuch illegal. When caught, they go to jail.
Now, if you simply chose to use this method to get rid of your house, even if you don't overappraise your house, your credit will be ruined. If you want to get rid of your house for 80-90% of the true value, you can probably sell it outright.
I hope I answered your question. There is always an hoest way to solve a problem, a house can be sold even in this market, as long as you're asking the right price.
Good luck.
2007-12-12 13:15:48 · answer #1 · answered by Alexander K 3 · 0⤊ 0⤋
I would say it is not legal, IMHO it is the same a stealing or fraud. If it was legal everyone would be doing it and beside you have to declare in the bankruptcy that you are going to keep the house and the car. When you declare bankruptcy you have to put everything you have into it and then decide what you are going to keep or continue to make the payments on.
2007-12-12 21:15:01 · answer #2 · answered by John P 6 · 0⤊ 0⤋
You crossed over to fraudulent misrepresentation with . ."with the intent of" . ..that makes it illegal and of course immoral.
Side note: It isn't rare that a bank won't lend on a property that is actively or very recently listed for sale.
2007-12-12 21:09:48 · answer #3 · answered by jon b 4 · 2⤊ 0⤋
ask an attorney,.,,,,, but it sounds like fraud to me
2007-12-12 21:08:36 · answer #4 · answered by THE CROP KICK CHICK 4 · 0⤊ 0⤋