What am I missing? Since when do banks give mortgages, let alone $500K + mortgages,

[pnwmom]

to anyone other than the owner of the property being mortgaged?

The answer is apparently obvious, because the reporter doesn't even ask the question. But I've never heard of this particular banking practice.

https://www.cnn.com/2018/05/04/politics/michael-cohen-donald-trump-campaign/index.html

Washington (CNN)As the 2016 presidential campaign was in full swing, Donald Trump's personal lawyer, Michael Cohen, took part in two financial transactions that gave him access to as much as $774,000, The Wall Street Journal reported Friday, citing public records.

The Wall Street Journal reported that, according to real estate records, Cohen increased his borrowing ability by $245,000 through a bank credit line tied to his Manhattan apartment.

Months prior to the February 2016 transaction, he and his wife co-signed a mortgage on a condominium in Trump World Tower in New York, which her parents owned, giving him potential access to an additional $529,000, the Journal reported, citing different real estate records.

Cohen has been at the center of a firestorm after reports surfaced that he made a payment ahead of the 2016 election to a porn star, Stormy Daniels, for her discretion on an alleged sexual encounter she had with Trump more than a decade ago.

[MaryMagdaline]

1. Good question. And what did he say he was using the funds for?

This is bank fraud. Although campaign finance violation might be a fine, bank fraud has serious consequences.

[DrDan]

22. I've had HELOCs on houses for 20+ years - I have never been asked the purpose of the funds

One just writes a check as though from a checking account.

[shraby]

2. It looks like the parents took out the mortgage and the son and wife co-signed it, sort of like

a double guarantee that the loan would be paid in case the parents died.
It's the only explanation I can think of.

[Maeve]

3. If they co-signed a loan, her parents must have been a party to the loan

A co-signer isn't the actual borrower, but the one promising to pay back if the borrower does not.

[pnwmom]

9. But if the co-signer isn't the actual borrower, then how is that cash available to him? n/t

[Maeve]

17. Second key phrase--potential access

Her parents pulled that money out and may (or may not) have given it to him--no one is saying what the money was used for.
A lot of "maybe" in that story.

[rzemanfl]

4. The operative word is "co-signed." Her parents signed the mortgage. n/t

[Wellstone ruled]

7. Believe there was a story about Cohen and Fraud dealing with this

issue hanging out there. All one really needs is a Appraiser to give you a Jacked up appraisal. Seen this crap during the 2006 housing bubble. And if you have someone that has Hot Money to lend,and there are people out there that will take a rider.

[pnwmom]

11. But being a co-signer simply obligates you to pay the mortgage if the owner fails to pay.

It doesn't give you legal access to the proceeds of the money.

[Mosby]

23. it must give you access to the equity though.

[mr_lebowski]

5. I don't understand how co-signing a mortgage would give him access to a bunch of cash?

Unless maybe they mean a home equity line of credit rather than a mortgage?

[B2G]

8. That's what I was wondering.

Signing a mortgage is a payment on a property. You don't get money as a result. It had to be an equity line of credit for the borrowers to have access to any money.

And if it was, and he cosigned, how is that illegal?

[B2G]

12. Here's a better article:

"Three months before he increased the home-equity line, Mr. Cohen gained potential access to another $529,000 in cash, through the fresh mortgage on the condominium owned by his wife’s parents, Fima and Ania Shusterman.

The Shustermans didn’t immediately return messages left at mobile phone numbers listed in a commercial database.

Mr. Cohen and his wife cosigned the $2 million mortgage on the condo in November 2015, New York real-estate records show, although they hadn’t signed prior mortgages on the property.

The borrowers took out $529,000 in cash, in addition to refinancing existing debt on the condo, which the Shustermans bought in 2004 and used as their primary New York residence. It isn’t clear whether or how the money was spent."

https://www.wsj.com/articles/u-s-probes-cohen-over-cash-he-built-up-during-campaign-1525478682

[Calista241]

6. Cohen is probably going to describe the payoff as an investment

We’ll see how far that gets him.

[Mr. Ected]

10. Parents owned. Perhaps they didn't qualify for a loan in that amount, so Mr. & Mrs. Cohen co-signed

If it's a HELOC, the funds can be used for any (legal) purpose. If it was a purchase money mortgage the story would be different.

Not saying that something fishy wasn't happening here - the timing and MO seems suspect - but on its surface, there's nothing here that summarily discredits the transaction or indicates bank fraud.

[B2G]

13. From the WSJ:

Three months before he increased the home-equity line, Mr. Cohen gained potential access to another $529,000 in cash, through the fresh mortgage on the condominium owned by his wife’s parents, Fima and Ania Shusterman.

The Shustermans didn’t immediately return messages left at mobile phone numbers listed in a commercial database.

Mr. Cohen and his wife cosigned the $2 million mortgage on the condo in November 2015, New York real-estate records show, although they hadn’t signed prior mortgages on the property.

The borrowers took out $529,000 in cash, in addition to refinancing existing debt on the condo, which the Shustermans bought in 2004 and used as their primary New York residence. It isn’t clear whether or how the money was spent.

https://www.wsj.com/articles/u-s-probes-cohen-over-cash-he-built-up-during-campaign-1525478682

[pnwmom]

14. Yes, the parents owned. And Michael guaranteed the loan with his signature. But that wouldn't

give him access to the proceeds on a property only the parents owned.

By the way, the parents are extremely wealthy.

[Ms. Toad]

27. You're confusing co-signer with guarantor

A guarantor is a back-up after collection efforts against the debtor fail. A co-signer has the same liability (and frequently the same access to funds) as his felllow co-signers.

[pnwmom]

28. Okay, thanks. I'd never heard of someone being able to access funds

from a mortgage on someone else's property.

[MaryMagdaline]

16. Thank you for explanation

If it is a HELOC loan, does the bank ASK what the money is for even though it can be any lawful purpose?

[B2G]

18. No.

It's not any different than any other line of credit. It's just secured with your home.

[MaryMagdaline]

19. Thanks

[bpj62]

15. Encumbering Property

You cannot get a loan on property that you do not own. This is not a car loan where the bank can repo the car if you stop making payments. All parties must first be on the title before the lender will lend the money. What may have happened is that the inlaws added Cohen and his wife to the title but they did not apply for the loan. All parties would sign the mortgage/deed of trust which is the public notice that a property has loan on it. However the inlaws would not sign the promissory note since they didn't apply for the loan.

I have worked in the real estate settlement business for 30 years so that is where my information comes from. Cohens explanation relies on the fact that most people do not understand how title and mortgages work.

[hunter]

20. Could this be elder abuse?

This was just on NPR:

So one study showed that about 60 percent of these kind of financial abuses to older people - the perpetrator is a family member. And it's something that I think is really hard to talk about, and many people don't talk about it. One reason that a victim wouldn't talk about it is they don't want to send their son or daughter to jail. Another reason is because they could be threatened physically. They could be threatened with neglect - i.e., I won't feed you; I won't give you your medication. I heard one example of a family member saying, I'm not going to give you your dentures that you need to eat unless you give me the money. This also happens over time. It's not like TV. It happens over months or over years.

--more--

https://www.npr.org/2018/05/04/608582970/why-few-of-the-millions-of-elder-abuse-cases-get-reported-each-year

I added the bold type.

I think most people cosigning a loan for a family member don't expect any direct benefit to themselves in return, only potential sorrow should the family member suffer hard times and have trouble repaying the loan themselves.

Maybe certain kinds of wealthy people and criminal swamp creatures don't think like that. If they cosign on a relative's car loan or mortgage they expect something in return beyond the comfort and well being of their relative.

[Princess Turandot]

21. The answer...the bank did not lend money to Cohen...

In November 2015, just before the existing mortgage was refinanced, the Shustermans themselves (the in-laws) took out another loan against the value of their condo, for $529,000. The Cohens were not part of that transaction, so no money was lent to them by the bank.*

That new loan was then consolidated with the outstanding mortgage on the property, resulting in a mortgage of $1,979,000. On the new mortgage document, the two Shustermans and the two Cohens are listed as the borrowers.

I assume this is why the WSJ used that awkwardly phrased 'potential access' description, as opposed to just saying he had the $$. They don't know what was done with that money.

-----------------

*This comes from ACRIS, NYC's handy online real estate transaction database:

The $529,000 loan-(pg 3) https://a836-acris.nyc.gov/DS/DocumentSearch/DocumentImageView?doc_id=2015111201386001

The refinancing-(pg 3) https://a836-acris.nyc.gov/DS/DocumentSearch/DocumentImageView?doc_id=2015112401183004

[pnwmom]

25. Thanks! This makes more sense now. n/t

[DrDan]

24. they may actually be co-borrowers which would give them ownership rights