My tenant convinced me to take out a $175,000 home loan to buy stock — then he stole my home
April 2, 2025
1 4 minutes read
“I cannot afford to take on the new mortgage with his $115,000 loan, especially at today’s interest rates.” (Photo subject is a model.) – Getty Images/iStockphoto
A few years ago, my best friend of over a decade (also my financial adviser and roommate at the time) convinced me that I should take $175,000 equity out of my property and invest it in the stock market. He was a broker and he showed me charts about how much money I could make long term. I applied but did not qualify for a home-equity loan due to my low income.
So he proposed a deal: I could “sell” him my home, but the property would remain mine. His name would just be on the mortgage so that I could obtain the equity ($175,000). We agreed we would split the mortgage and profit from the investment. For years, we did. He started to become hostile towards me when I started dating so I asked him to move out.
Shortly after that, he claimed that since the house was in his name, the equity in the property in the past few years belongs to him ($100,000). I was shocked because our deal was that the property would always remain mine, even though his name was on it. We signed an agreement that our original intention with the transaction was for no ownership interest to transfer.
However, within a few months, he claimed that the property belonged to him and he had just been letting me stay there “as a courtesy.” He secretly took a home-equity loan on my property for $115,000. I am now suing him to get the property back in my name and to make him pay back the $115,000 that he stole via the fraudulent home-equity loan.
I am afraid that he may have hidden his money so that I can’t get paid back even if I win (he claimed to the mediator that he’s “judgement proof” even though he makes $125,000 a year). If he has hidden his assets and I cannot get paid, what can I do? I cannot afford to take on the new mortgage with his $115,000 loan, especially at today’s interest rates.
His entire proposal made no sense, and smelled worse than a fish market. – MarketWatch illustration
Beware of friends who approach you with a smile, presenting solutions to financial problems, especially problems that don’t actually exist.
His entire proposal made no sense, and smelled worse than a fish market. Your line, “I was shocked because our deal was that the property would always remain mine, even though his name was on it,” gives me pause for thought. What does “it” refer to? You cannot retain sole ownership of the property if his name was on “it” — the deed.
It appears that he tricked you and added himself to the deed. If so, he could refinance as a co-owner. “California law allows a co-owner to take out a mortgage without the other co-owners’ consent or knowledge,” according to Underwood Law, which has offices across Southern California. “Co-owning property with other parties can be quite a responsibility that can be difficult to manage.”
“One particularly stressful aspect of managing property is managing the debt that comes with financing the property,” the law firm adds. “Some parties may even want to take out more debt without letting their fellow co-owners know. If such a debt or encumbrance on the property is taken, it is still enforceable and allowable and can result in the sale of the entire property.”
That’s scary, assuming this is what happened. Your former friend is listed on the mortgage and the loan. If you unknowingly added him to the deed, it would be an uphill battle to have him removed and to reimburse the money he released from the deed without you being able to prove that you were defrauded, that it was done under coercion and/or that you did not have testamentary capacity.
This is a cautionary tale about who you let into your life, your home and your finances. When somebody is putting up no capital and giving you rudimentary advice, and wants you to sign legal papers — that is, when they have contributed nothing but chutzpah — you should call a friend, call a lawyer, call your bank and write to the Moneyist. It may now, alas, be too late.
If he forged documents and your signature, you would certainly have a more clear-cut case. But you are correct to hire a lawyer and give it everything you can to claim your home back and retrieve the money he pulled from your house. He is a bad actor who set out to defraud you, and I hope you and your attorney can prove that in court.
