Not sure if it is 'Fraud' but they've surely been screwed!

[wovenwonder]

Friends refinanced their house for an unbelievable mortgage rate. They needed $80,000 to refinance and ALL they had to do was agree to take the mortgage out for $130,000 and give the finance company the extra $50,000 to invest to their choosing. My friends would only be charged interest on the amount they needed for their home ($80,000) and only make their monthly payments based on that amount. They would not be earning any money on the $50,000 investment amount --- just getting a terrific interest rate on their mortgage amount.

So now they get refused for a home equity loan -- and find out that the lean on their home is for the entire $130,000.

This sounds like such a scam to me! She made an appointment with a lawyer. My concern is that if the mortgage company goes belly up -- or makes bad investments -- then my friends are liable for the $50,000 that they never received - seems that way to me. I also told her that it is possible that the agreement that they signed says that the finance company could keep use of the $50,000 for the term of the mortgage. Which means that they may not be able to sell their house in the meantime (if they decide to do so).

I am so glad she is seeing her lawyer -- and I hope it isn't too late!

Has anyone else ever heard of anything like this? Is it legit?

 

[SeaShelley]

WW...I'm sending you a pm with some info.

 

[jamsmom]

Doesn't sound right to me. Glad she is seeing a lawyer.

 

[Mishetta]

Wow...what a scary thing to happen! Hope the lawyer can help them.

 

[nativetxn]

YIKES! I've never heard of anything like this. I hope the attorney can get her clear of this headache.