Man, people really like to point those fingers, don’t they?
Hey, I don’t know all the details of the transaction, but from what was posted, I see no fraud there.
First, there was no “phantom” second mortgage. It was a legally created 2nd note and it was presented to the primary lender in the package. By calling it a phantom 2nd, you’re assuming that it was never created or that it wasn’t reported to the primary lender, which is false.
Second, REO bought the 2nd at a discount. It wasn’t a “write-off” 2nd, where the seller just considers it “paid in full” at closing. Mortgage notes are bought at a discount all the time. In fact, that is one of the methods of RE investing, if you want to read some on here. Hey, lenders sell notes at the closing table all the time, too. But because REO did it, you’re spouting out that it’s fraud and illegal?
Third, just because REO bought it at a discount doesn’t make anything illegal. The lienholder can do whatever he wants with the note whenever he wishes. Anybody ever here of shortsales? Even if REO didn’t buy the note, the seller could still have offered a discount for a quick payoff (Hey, REO may even offer that to himself!). Or he could have chosen to wait on the full amount.
Maybe REO’s company bought the property and REO, himself, bought the note. So now, REOconsultants has to pay REO a monthly payment. Don’t know, but it works for me.
And maybe, before you know all the facts, or start putting more in than what’s given, we all leave our fingers in our pockets a little longer. It may go off.
Merry Christmas and Happy Holidays!
Raj