Short Refinance Scams<<Here is the deelio

Many people have asked about a "short refi", maybe it will benefit them somehow.

At this point in time, it ain't happening.

Here is how the scamsters negotiate your money into their pockets. Their contract loks official enough, until you read it carefully. It is full of words like "attempt", "may", "possibly", that protects them from actually delivering a short refinance.

When they tell you that you are "pre-qualified", that is YOU as a borrower have credit, income, employed, etc. to qualify for the loan. The PROBLEM here is that the PROPERTY is very likely over valued at this moment, and the holder of the new second lien is going to charge you a serious premium on the interest rate for taking on a new loan.

Let's say that you have a 2nd mortgage for $100,000 at 8.25%, interest only. Your payment is $687.50. Let's say that they somehow negotiate or refinance you into a replacement 2nd mortgage at $50,000 for 15 years at 15% paying principal and interest. Your payment would be $699.79. Maybe a good deal if you can afford it, but right now most people are looking for cash flow, not higher payments.

Didn't finish earlier post.

So, the "weasel" words these guys put into an official looking contract, give them the out if they can"t deliver as promised. Not just that, but the disclaimers give the right to keep at lest 1/2 of the fee, and keep the other 1/2 if they provide a loan program, even if it is not beneficial!

All of the above applies to 2d mortgages for sure.

There MAY be some short refi's at some point of purchase money 1st mortgages. NOT happening yet, but it is a market being explored. The problem there is the investors will take hits of $100,000,000,000's, (Billions) in the ensuing maelstrom. I don't see that happening any time soon either.

[Moe Bedard]

Great advice Steve. There are a lot of short refinance scams being played out right now. Thanks for the heads up to the community!