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The "Silent Second" Revisited!
On November 26, 2006, the Orlando Sentinel published an article entitled "Hear this loud and clear: A "silent mortgage" is fraud."  The article was written by syndicated columnist Robert Bruss, Inman News.   The term "silent mortgage", synonymous with "silent second", is one that I hadn't heard for nearly a decade.   Feeling admittedly "startled", the observation of a lending industry veteran shared long ago came to mind: Fraudulent schemes from the past have a way of resurfacing when the housing market slows.  The term "silent second" was used often among industry insiders to describe a popular scheme to defraud lenders during the 1990's.  With this being said, consumers need to know enough about "silent seconds" to avoid them and the accompanying criminal consequences.
The website for the Federal Bureau of Investigation offers this definition of the "silent second":  The buyer of a property borrows the down payment from the seller through the issuance of a non-disclosed second mortgage. The primary lender believes the borrower has invested his own money in the down payment, when in fact, it is borrowed. The second mortgage may not be recorded to further conceal its status from the primary lender.  It's important to note that the buyer actually ... more

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