Mortgage/Collateral Question

[Damean Townsend]

I have read many years ago of a way to get a bank to loan you money based on the property as collateral. The deal would be a purchase for "a dollar" from the seller. We close. A loan for the purchase price of let's say $50,000 from the bank. I, the buyer would hand over the real purchase price of $50,000 to seller. Seller walks away and I have the property. This was legal years ago in New York state. Is this the correct steps? And is it still legal?

[Mary B.]

Originally posted by @Damean Townsend:

I have read many years ago of a way to get a bank to loan you money based on the property as collateral. The deal would be a purchase for "a dollar" from the seller. We close. A loan for the purchase price of let's say $50,000 from the bank. I, the buyer would hand over the real purchase price of $50,000 to seller. Seller walks away and I have the property. This was legal years ago in New York state. Is this the correct steps? And is it still legal?

Where did the 2nd buyer come in to purchase for $50K or did I miss something? You stated the purchase price was ''a dollar'' $1.00. You closed on that $1.00 purchase. Then you or the mystery buyer went to the bank for a $50,000 loan, right? Who is getting the loan for 50grand? How many parties are involved here 3 or 4(not including the bank)? Currently it seems shady(highly illegal) but I may not have all of the pieces in places.  I love to learn new interesting things so school me. 

Kudos,

Mary