Scratch & Dent

[Westgrl]

We refinanced our mortgage appx. 1 year after purchased. The appraiser said the house had more value than when we bought it & turns out he lied about some things on the report (that we did upgrades we never said we did). We closed on the new loan, a month later I am being asked for receipts & my loan guy said if they can't show proof of why the home gained value my loan could be sold to a "scratch & dent" company.

I am very stressed out about this. He assured me we are still a little ways from that happening but is there anything I can do if this happens? I don't want to be left having to deal with a company like this for the next 30 years.

 

[OneHugeMess]

Listen. None of this is your problem. Someone committed mortgage fraud in your name, and you were a un-willing participant and you are not responsible for anything that is going on.

First off -- I would CEASE all contact with the broker (who is probably trying to cover his ass) and refuse to answer any further communications without legal counsel. Depending on the signatures used for some of these documents, you MAY not even technically owe any money to anyone.

Scratch & Dent is a side industry of the mortgage market, where loans with severe problems go. Like, completely bogus income documentation, missing promissory notes, early default, bankruptcy, etc. Lenders take a loan that would normally sale for 101 - 102 cents on the dollar, and unload it for 70 - 75 cents. Like I said, this is not any of your problem. Likely, what will happen is your loan will be sold as defective, and you'll end up with a Servicing Company like PHH/Ocwen or Mr. Cooper.

If I were you though -- I would attain a lawyer, and DEMAND copies of your entire loan application. You need to go over everything with a fine-tooth comb. I would also request all documents the title company and closing agent has on hand. Don't tell them the backstory, just demand the documents.