i have recently came across a seller who has a current loan balance of 155,000 and a second of 37,000
total 192,000
purchase price of home 163,000
current market value of home 175,000
how could this have happened if the value of the home has never passed 175,000
Because with decent credit, some lenders will lend up to 125% of current value – I see 110% ads all the time.
It looks like maybe a 110% loan against a $175K appraisal ($192,500)…
Keith
Oh my someone is screwed :o
Maybe not “screwed” per se but there’s nothing like going to the closing table as a seller and having to bring a check with you!
Keith
See now in this case the seller pays for realtors costs!LOL
Could be a depreicating market.
Could be one of those 125% of home value equity loans that used to be advertised on TV heavily - so the extra loan - probably credit card debt wrapped into their house.
Could be mortgage fraud
Example - one of the bigger fraud cases here in KC is this builder Miller. He would build houses (brand new with low quiality workers and materials) that were a great layout and design and get a very motivated buyer “preapproved” to buy the house. The day of closing would roll around and the house may or may not be ready to move in, but smooth talker that he was, he would convice the buyers that they could go ahead and move in and he would finish up in the next week or so. They were motivated to be “homeowners” and had already given notice on their rental unit that they would be out so the go ahead and close on an unfinished house (not always unfinished, but many times) Then these motivated, unsophisticated buyers would go to closing and find that the sale price of the home was considerably higher that the price they thought they were paying, but not a problem. Miller would explain that they just did an appraisal on the house and it was appraising much higher than orinally thought and we are going to keep your first mortgage right where we had originally discussed, and we will put a small second mortgage in place for the rest. Not a problem, just sign here and here.
Not sure exactly how he was able to get all this accomplished other than everyone involved except the buyer was in on the deal.
Then after the buyers moved in - all work would stop, and the buyer would have to finish the house themselves, then all the windows or the roof would start leaking, walls and floors not straight.
Then they can’t afford the payments on both mortgages and the repairs the house needs, they give up, walk away and the houses would go into foreclosure - Almost every home this man built here in Kansas City was this exact scenario from his $150,000 model to his $250,000 model.
So in the numbers you were quoting - yes something is wrong and someone took advantage of the borrower - if they are facing foreclosure this would be a great candidate for a short sale - the lender’s don’t want to get in trouble for mortgage fraud and predetory lending.
Now THAT was funny.