Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
You're only perpetuating the great american credit bubble by financing furniture for 30 years. Will it last thiry years? What will it REALLY cost you to pay for it over 30 years????
Please tell me if this scenario is illegal. I have been asked to create hot leads for this situation and want to make sure I will not be breaking the law.
Scenario:
- House is owned by seller(me) and we are selling to a legit buyer that we find through advertising, etc.. and have no relationship with the buyer
- I have the house appraised at $249,000
- I offer 90k cash back due at signing to the buyer divided into the following ways:
1. 25k downpayment provided for the buyer on the home
2. 12k for closing costs(estimated) this way buyer pays nothing out of pocket
3. 53k cash back after closing
- Everything is disclosed on the HUD
Please tell me your thoughts asap!!
My first thought is that there is no way any lender with any sense is going to want to lend out $250k so that you & your buyer can walk away with no one having any money inthe property except the lender. And am I reading this correctly? Where's that original $25k downpayment coming from? If the lender is putting it up, it's not a downpayment, is it? If the lender isn't putting it up, someone else has to be, and then you want the lender to give it back? Why?
The next question I have is; what do you mena you have been asked to create hot leads? Who asked you to create these leads, and what will happen with them? Are you & your unnamed other going to attempt to advertise this property for sale under the conditions outlined?
Wouldn't you be better off just putting your house on the market for the real worth, which looks to be about $160k?
My first thought is that there is no way any lender with any sense is going to want to lend out $250k so that you & your buyer can walk away with no one having any money inthe property except the lender. And am I reading this correctly? Where's that original $25k downpayment coming from? If the lender is putting it up, it's not a downpayment, is it? If the lender isn't putting it up, someone else has to be, and then you want the lender to give it back? Why?
The next question I have is; what do you mena you have been asked to create hot leads? Who asked you to create these leads, and what will happen with them? Are you & your unnamed other going to attempt to advertise this property for sale under the conditions outlined?
Wouldn't you be better off just putting your house on the market for the real worth, which looks to be about $160k?
First I am praying that they are not asking you to to do false advertise
because that will put you in a bad position if someone offers full price and you won't accepte it.
if they are asking you to sell and you put all the money up for the down payment and then the closing costs also they walk away with all that cash
that is illegal it was changed last year no title company , lawyer with touch it, do you have a lawyer?
to finance 10k in furniture is going to barely cost me anything a month.. granted in 30 years that 10k will be 30k, i think its worth not having to pay it out of pocket right now? no?
In my professional opinion, it sounds like mortgage fraud.
1 - "Down payments" require "seasoning". They must be in the BORROWER'S (buyer's) control for "60-days" (two bank statements = 32 days).
2 - Closing costs (and prepaids/impounds) may legitimately be included in the loan amount. However, $12K sounds WAY too high, and most lenders' underwriting guidelines will not allow more than 3% of the laon amount to be used -- that's less tha $7500 on a $249K loan amount.
3 - Cash back at closing is a myth that hasn't been allowed for years. Someone had been reading too many of the infomercial gurus claptrap. This is the essense of mortgage fraud and the FBI puts people in jail for this. Are there exceptions? Yes, but they must be structured through legitimate management companies, as in the case of a 1031 tax-deferred exchange.
As a loan originator, I must view each loan application through the jaundiced eyes of an underwriter. First off, I would dismiss your appraisal and request that you order one from an appraiser that I know is legitimate (and acceptable to the lenders I may use). Somehow I doubt that my appraiser's valuation will be as high as yours. (Call it a hunch.) Once the loan is placed, the lender will then review the appraisal, and may cut the value if they don't feel comfortable. (They have to sell the loan into the secondary mortgage market, ya know.)
Whatever that final value is, will become the 100% LTV (loan-to-value) of the loan amount -- not one cent more.
Are you willing to deposit $25K into the borrowers bank account for the next month or two? (If it were your child, perhaps you may consider the risk, otherwise DON'T DO IT!) No seasoned funds -- no loan.
As I mentioned above, 3% or ~$7500 is probably going to be the lender's limit on closing costs. If the actual costs are $12K, the buyer needs to come to close with the additional $4500 in "seasoned" cash! Better up your deposit by $5K to be safe.
If this "buyer" is performing a 1031 Exchange, from a previous sale and it is being conducted through a legitimate intermediary, he may indeed receive cash back at closing. Aside from that, there is a very good chance that your borrower is involved in a mortgage fraud scheme.
It could be that the borrower/straw buyer and the loan officer are conspiring to rip-off the lender with which the loan would be placed. Contact your State's Attorney General if you expect mortgage fraud.
They could have an issue, since furniture is considered personal property and NOT real property. Nevertheless, appliances are personal property and are never excluded from the loan amount.
I would write a bill of sale as part of your purchase agreement that itemizes the furnishings. Place a modest value on the furnishings.
If the property appraises well, I suppose that the selling price could reflect the additional cost. Otherwise, purchase the furnishings outside of closing.
I am a Conventional Mortgage Underwriting Manager... on every Fannie Mae/Freddie Mac loan we approve... all purchases have a statement on the approval letter that states there is zero cash to the Borrower at the closing. In rare circumstances (overpayment of a down payment, for example) is that rule ever broken.
I say get a lawyer BEFORE you agree to this... so you don't need one AFTER.
to finance 10k in furniture is going to barely cost me anything a month.. granted in 30 years that 10k will be 30k, i think its worth not having to pay it out of pocket right now? no?
Paying $30k for $10k of furniture is a very stupid thing to be doing.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Beware of Mortgage Fraud!
