Skip to main content
No. of Recommendations: 7
Are liar loans making a comeback?

See link below!

I recently sold a house as an executor. The verbage on the sales contract indicated the buyer was going to be trying to obtain a 30 year fixed FHA mortgage.

I confirmed with the real estate agent, who was also the buyers agent, that he meant to occupy the home as a personal residence - primary or second home. She said that she had discussed this with him and yes he planned on occupying it himself. I also discussed my concerns whether he would qualify being self-employed.

We had a couple of addendums to the original contract and I noticed on one he was now getting a 5 year balloon mortgage which told me the loan was most likely for an investment property.

Seems like people are getting loans to buy homes by calling it an investment property when they plan on actually living in the house.

As long as the purpose of the loan is to buy an owner occupied property the rules are strict and there is no way to get around them - that is unless the paperwork indicates investment property i.e. business purpose.

As an aside when I was depositing an inheritance check I told the teller how it had become hell to sell a house. She said oh no!!! She had just bought a house and said it has also been hell. When I asked her what part had been so difficult she said getting the loan.

As I write this they are getting ready to discuss the comeback of liar loans on Bloomberg TV.

I think the Feds will snip this one in the bud pretty quickly.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.