"Gifted prop" but not really and want to use HELOC...Stupid?

Question

Here is the situation/hypothetical,

Lets use the name Bob. Bob owns a property worth $210,000 and still owes 150,000. Thing is, no one knows that he owes this and it appears he owns it outright. (personal loan/mortgage from a family member) Bob would like to take a HELOC out of the property for about 160,000 to invest in Real Estate. Bob with obviously have to pay his "hidden mortgage" and the HELOC back at the same time and will rely on the investment properties to pay back the HELOC. Is Bob.. Stupid, Dangerous, Smart? Obviously dishonest, because he will tell banks he does not pay a mortgage. Overall question here is though, How risky is this move?

Thank you all

Jason Hirko · Answer

@Greg Watkins Bob is going to jail for Mortgage Fraud... He'd be better off finding another stupid family member to give him another unsecured $150,000 loan

JD Martin · Answer

Bob is dishonest. Bob's family member is stupid, because they don't have a position on the property. Bob is also likely going to jail if/when it comes to light that there was an outstanding obligation on the property, because failing to disclose is fraud.

Greg Watkins · Answer

Bob's name is on the title

Jeff B. · Answer

The person on title will have to apply for the Heloc as ownership will be verified.

"Gifted prop" but not really and want to use HELOC...Stupid?

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