"Forgivable Second" - Posted by G(Atlanta)

Posted by HTG on September 17, 2003 at 06:56:27:

Well there is nothing wrong with the seller carrying a second BUT if the second is being forgiven, and the lender doesn’t know, then it very well could be fraud. I think the definition for loan fraud is when something is done that isn’t disclosed by all parties to the lender. I would suggest you speak to an attorney that specializes in Real Estate.

“Forgivable Second” - Posted by G(Atlanta)

Posted by G(Atlanta) on September 09, 2003 at 13:48:02:

Has anyone ever heard of this term and if so, could you please explain it to me?

Thank you very much,


Re: “Forgivable Second” - Posted by HTG

Posted by HTG on September 13, 2003 at 18:44:43:

Here is an example.

House will appraise for $200,000.

Seller needs to sell and will take $170,000.

Seller will carry a second mortgage for $30,000.

You get a loan for the 170K making the deal 100% financing. After the deals closes, the seller forgives the second that they agreed to carry. Now you are left with only the original 170K.

This will only work in situations where the seller is desperate and must sell for less than what the house is worth.

Re: “Forgivable Second” - Posted by G(Atlanta)

Posted by G(Atlanta) on September 14, 2003 at 06:48:33:

Is this considered loan fraud? If not, how can something like this be added to the contract and does the lender need to know about it? I am just curious before I go and do a deal like this and get in trouble. Any help on this subject would be greatly appreciated.

Thank you for time,