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Originally Posted by Muta
Now that I know how this works (even though I still don't fully understand it), I believe I know people who have gotten EXTREMELY rich this way. Like... having a 'Maserati as your spare car' type of rich.
In this scam, though, don't you have to pay back the mortgage at some point anyways? If so, where's the incentive to pocket the extra $50k? And why are you not allowed to put these mortgages under your own name? I'm not too familiar with this type of stuff, I've just never been interested enough to find out.
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Simple, the perps pocket the difference between the mortgage and the actual sale price and when the mortgage goes sour the staw buyer's on the hook. In most cases I would imagine that the straw buyer would have to declare bankrupcy in a negative equity situation.
The lawyers and real estate agents involved manipulate documents to make it appear that the property sold for more than it actually sold for. The bank's non the wiser.