I this illegal to do with my condos?

[Thomas D.]

Reposting this in a bigger forum for feedback:

I own 7 condos in a complex close to a local college. They were all bought for under 100k and are worth 150k now. My uncle who invests in property says I should post 2 of my 7 for sale on the MLS for 275k each. He will buy them at the inflated price for cash creating 2 new comps for my remaining 5 condos.  I would give hime back the 275K he paid me and we would then go to the bank and leverage the remaining 5 and refi to pull out cash based on the higher comps and take that newly created money and the original 275k x2 money and go do this all over again at another condo complex.  We have a complex locally where condos are in the 50k range.  I would buy 4-8 of these new condos over time then wait a year and repeat the process.  He comes in and buys 2 for an inflated value of 150k each and we borrow against my remaining condos based on the new higher comps.

If they all can be borrowed against and cash flow at these higher prices why wouldn't I do this?  He jokes that we should call this a condo crush.  Does this sound illegal?

[Wayne Brooks]

That pretty much is the definition of mortgage fraud.....non arms length transaction, straw purchase, etc.  I don’t care how you want to try and justify or rationalize it, it is what it is.  Besides, the lender won’t necessarily be so blind.

@Chris Mason may can give you more specifics.