Legal Question in Real Estate Law in California
mortgage loans
is it legal for a homeowner to take out out multiple loans at the same time? in other words, to be working with 3 different companies on a 2nd mortgage and have all of them go through before any could be recorded?
2 Answers from Attorneys
Re: mortgage loans
It would be fraud for sure if the homeowner knew that multiple loans would be recorded so close together in time that none of the lenders was likely to have notice of the other loans.
I would sincerely hope that our modern recording system, together with modern last-minute title checking practices of lenders, would absolutely prevent this from happening. I suppose when there is a modicum of trust and the lenders are relaxed or not too professional, it might happen.
If the borrower knew, suspected or hoped that this would happen, it's fraud, and the culpable borrower will end up swinging from the yardarm.
Re: mortgage loans
The clear fraud is telling three different lenders that each will have a second deed of trust when only one will. None of the contracts are legal therefore and the borrower is getting money under false pretenses that he knows the lenders will rely upon to their detriment-- a definition of fraud.
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