Matt Levine’s Money Stuff: Banks Misplaced Some Mortgages

Cockroaches

One fraud you might try is:

1. Find a house that costs $1 million.
2. Go to a bank and ask to borrow $800,000 to buy the house.
3. The bank gives you a mortgage loan, you put in $200,000 of your own money, and you buy the house for $1 million.
4. List the house for sale for $900,000.
5. Quickly find a buyer (because you are selling the house at a discount).
6. Say to the buyer “I want an all-cash deal.”
7. “No problem,” says the buyer, “I have no mortgage contingency and can close quickly.”
8. “No I mean I need a lot of $20 bills ...