Is obtaining a cash-out refinance before intentionally defaulting loan fraud?
Author: Rob K. Blake | Date: October 14, 2008 | Filed In: Refinancing Answers
Here’s the entire question…
“A friend of mine is in a serious situation. She is strongly considering intentionally defaulting on her mortgage payments in order to be able to move out of her current State. What’s worse is that she is considering obtaining a cash-out refinance on her home before intentionally defaulting. What are the legal/credit ramifications of this? Doesn’t this amount to fraud?”
Cash-Out Refinance Fraud
Yes…I’d have to agree with you. A mortgage loan is considered a long-term obligation made in good faith…which this friend of yours clearly doesn’t have going into the agreement. Hiding the real intention at application in my view is mortgage fraud.
This could also be considered theft.
Intentionally taking the cash-out refinance proceeds and then immediately defaulting is probably legally more like grand theft…or theft by fraud…or any number of crimes.
I’d warn your friend not to go down this road…
Of course, I must add my typical disclaimer here…seek actual legal advice from an attorney as I am not an attorney before making any decisions.
Thanks for the question!
Good Luck!
Author: Rob K. Blake
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yeah but all the banks are doing it…
james,
Do you mean the banks are refinancing their debts…knowing they are going under due to the credit crisis?…
That maybe true…but banks are not going to let you and I get away with what they get away with…
You know that… right?