HUD settlement statement? (mortgage, mortgage, properties, attorney)

[DKM]

There is definitely no tax reason for either party to do this. So look for another reason if you are curious...

[petsandgardens]

Originally Posted by southernnaturelover

My attorney isn’t quite sure why they want to do it that way either, but she said banks do lots of things for weird reasons. She did bring up a good point, if I were to sell the house in a few years it would look like I paid more for it, hence less taxes on my profit. I left the contract for her to look over, she was busy with other things while I was there.

There is no buyer’s premium, and Selene will have to pay a 5% auction fee ($1900).

I think that's key to the risk.

[jackmichigan]

Originally Posted by southernnaturelover

My attorney isn’t quite sure why they want to do it that way either, but she said banks do lots of things for weird reasons. She did bring up a good point, if I were to sell the house in a few years it would look like I paid more for it, hence less taxes on my profit. I left the contract for her to look over, she was busy with other things while I was there.

I trust that your attorney isn't a tax lawyer.

[Lacerta]

I'm always very wary of any transaction that involves "you pay me extra and I'll refund you". I don't know that I've ever seen a situation like that that was NOT a scam. I've worked in a real estate office for 17 years and we've bought and represented buyers on quite a few bank owned, and I've never heard of anything like this.

Tread very lightly.

You will definitely want an independent 3rd party to ensure that the seller's $8000 funds are good -- held back from your funds, for example -- and not a separate check from them, unless you have that check verified with the issuing bank that it is legitimate and certified funds first.

[petsandgardens]

I'm imagining scenarios. Like if there's a setup so that the extra will be considered excess proceeds and that would have to be returned to the previous owner. Reading too many detective books. Looking forward to hearing the result.

[southernnaturelover]

I got an email today saying that the closing should be within the next 15 days. All of the documents have been sent to my attorney’s office.

I did speak to a relative who has owned a real estate company for many years, and she didn’t seem surprised at all. She said banks fudge numbers all the time so that they can get reimbursed by HUD.

[BoBromhal]

still sounds like fraud.

by the way, where do you think HUD gets that $8K?

[Mircea]

Originally Posted by southernnaturelover

I got an email today saying that the closing should be within the next 15 days. All of the documents have been sent to my attorney’s office.

I did speak to a relative who has owned a real estate company for many years, and she didn’t seem surprised at all. She said banks fudge numbers all the time so that they can get reimbursed by HUD.

That's immoral unethical and illegal, and specifically, it is fraud.

You should consider the legal ramifications, should the bank be audited by regulators.

Remember that the statute of limitations on fraud starts with the discovery of the fraud, so you could potentially get burned 10, 20 or 30 years from now.

[GoPhils]

But isn’t it really the bank committing the fraud, not OP?

[petsandgardens]

Originally Posted by GoPhils

But isn’t it really the bank committing the fraud, not OP?

I think the problem is the buyer also signs the papers. And right around where it says she's not being reimbursed.