Legal? $800k mortgage on a $60k property

Member since 2019 · 3 posts · 0 votes

A rural property with a run-down residential manufactured home worth $60k; is there any legal means the owner was able to take out a mortgage on it for $800k?

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Ryan R.

Realtor · Riverside, CA · Member since 2015 · 28 posts · 30 votes

This could be part of a cross collateralization type loan, were several properties are part of the collateral for one large loan. For example each property may only be worth $200,000 and 10 of these properties are collateral for one $800,000 loan, while each property would be upside down and seem to be over encumbered but combined they are only at 40% LTV.... The loan recorded on each property will still show as $800,000 not a fraction of the total loan amount.

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Aidan Mulligan
Rental Property Investor · Charlotte, NC · Member since 2019 · 161 posts · 178 votes
7y
@Serenity Ji I have no idea about the legality of it but no one will lend you on it.
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Serenity Ji
OP
Member since 2019 · 3 posts · 0 votes
7y
I’m asking because it has been done already (not by me).
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Kris L.
San Antonio, TX · Member since 2019 · 930 posts · 836 votes
7y
I guess it depends on how large the rural property is. If its 320 acres of farmland, the house is only a small portion of the property value.
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Serenity Ji
OP
Member since 2019 · 3 posts · 0 votes
7y
It’s a residential parcel; 5 acres total. Land valued at 50k, building on site valued at 10k.
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Jill F.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
7y
Could it have been one of a group of properties securing the mortgage?
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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
7y
Read the mtg document.
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Caleb Heimsoth
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
7y
@Serenity Ji. If I had to guess a bunch of “private investors” lended money on this property and no one checked to see what other liens there were. I believe this happened in Kansas City a while back. Don’t remember all the details but end result was dozens of mortgages on individual properties that were basically worthless
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Ryan R.
Realtor · Riverside, CA · Member since 2015 · 28 posts · 30 votes
7y
This could be part of a cross collateralization type loan, were several properties are part of the collateral for one large loan. For example each property may only be worth $200,000 and 10 of these properties are collateral for one $800,000 loan, while each property would be upside down and seem to be over encumbered but combined they are only at 40% LTV.... The loan recorded on each property will still show as $800,000 not a fraction of the total loan amount.
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Lee Bell
Real Estate Appraiser · Isabella lake, CA · Member since 2018 · 628 posts · 491 votes
7y
Textbook fraud.
They have been property flipping a handful of various residential

locations back and forth between their business partner, each time

increasing the supposedly sales price by 100-200k, and eventually take

out a large mortgage on said properties. No renovations are done, and

the properties are typical single family household types.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Caleb Heimsoth:
@Serenity Ji. If I had to guess a bunch of “private investors” lended money on this property and no one checked to see what other liens there were. I believe this happened in Kansas City a while back. Don’t remember all the details but end result was dozens of mortgages on individual properties that were basically worthless
marquis properties Chad Duetcher is who your probably thinking of.
this could be part of a cross collateral.. IE lender just securing up a bunch of different properties..

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Ryan R.:
This could be part of a cross collateralization type loan, were several properties are part of the collateral for one large loan. For example each property may only be worth $200,000 and 10 of these properties are collateral for one $800,000 loan, while each property would be upside down and seem to be over encumbered but combined they are only at 40% LTV.... The loan recorded on each property will still show as $800,000 not a fraction of the total loan amount.
sorry did not catch your reply and posted the same thing..

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Matt Carey
Investor · Brandon, FL · Member since 2017 · 178 posts · 67 votes
7y
@Serenity Ji move on.
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