Why do some foreclosures have >200% LTV?

[Nancy Zhao]

I see these kinds of properties occasionally. Where the owner somehow managed to borrow twice the market value of the home at the time of the loan. This is before taking into account unpaid interest and late fees.

For example this home was worth less than half the amount the owner refinanced into, and this took place in 2017...

[Ron S.]

I don't see that being probable (Possible? Maybe but I doubt it). Traditional HARP loans were for GSE loans originated prior to May, 2009 and Fannie/Freddie loans were subject to conforming limits so, it wasn't a HARP loan if there was a refi in 2017 and for that amount although, if the loan balance was ten times lower? That scenario could work. It isn't a reverse mortgage either as there is an equity requirement for the reverse program. It isn't a neg am loan since those don't exist any more and didn't last year either so, none of those scenarios would work for how the balance could be twice the value (Or any factor above the value).

The only thing I can think of is that you don't have a copy of the appraisal done when the loan for $3.2MM was done. Maybe you know the area or live next door and have a better idea than most about the values in the neighborhood. Maybe it's a typo on the loan amount?

I can't think of any scenario where any lender in business (and wanting to stay in business) would lend twice the market value unless they cross collateralized multiple properties of the borrower in the same loan. The only way to find that out is to look at the note.