Too Good To Be True - Posted by BHood

import · November 21, 2000, 1:12pm

Posted by Michael Morrongiello on November 21, 2000 at 15:45:10:

B Hood:
Not Knowing where the property is located puts me and perhaps others at a disadvantage.

Other that the fact that there may be specific state and federal lending laws that might come into play here, you can lend money to this individual, however you questions were as follows:

“Does this sound doable? Also, do any usury laws come into play here?..”

Sure, you can make this loan. However the 2nd lien you are getting for collateral is very weak since the property securing the loan is pretty much encumbered. Depending on the state YES usury laws may be violated. The risk of that happening would not be worth the return in my opinion.

I would be cautious on this one. The promise of a great return means little IF you can never be repaid.

To your success,

Does this sound doable? Also, do any usury laws come into play here? Finally, anybody interested in helping out?

Michael Morrongiello

import · November 21, 2000, 1:12pm

Too Good To Be True - Posted by BHood

Posted by BHood on November 21, 2000 at 14:12:28:

Can somebody tell me if this deal is too good to be true?

A mortgage broker called me today. He said that he has a builder who needs to borrow $15k in order to do a job in which he will make $60k in three months. He can’t get financed because he had a bk 11 months ago and he needs the money like yesterday. He’s willing to borrow $20k, giving $5k to me and the loan officer to split between ourselves, and to pay 30% interest amortized at a 5 year rate over the next few months until he gets cashed out for his job. For collateral, he’s willing to work this as a 2nd mortgage against his house. The house appraised at $275k and he owes $213k on the 1st mortgage. Both loans together create an 85% LTV ratio.

Does this sound doable? Also, do any usury laws come into play here? Finally, anybody interested in helping out?

Thanks in advance for your replies.

Brent

PS I also posted this message in the Financing Forum.