Are you saying if i borrow against my house then buy something and still use my house as collateral (lien), That would be fraud? I suppose if you borrowed all the equity but you could still have a lien on the rest of your equity. But if you paid for your house with a promisery note you would not be able to borrow against it either because you don't own the equity. Though I still think the insurance only applies to the previous owners of the house. Or else we would all screw the banks this way. Seems to me this is a small passage of a far greater document that could explain the rest. Do you have a link?
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