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HUD has secret rules. It has long said in informal opinions and public speeches that rebates to consumers do not offend Section 8 of RESPA, but it refuses to put this position in a regulation or policy statement. As a result, settlement providers continue to inquire unnecessarily and to seek legal guidance on this issue.
With all the information that I have provided, a reasonable interpretation will reveal that cash back rebates from real estate brokers to buyers are protected by the USDOJ, do not violate RESPA and are not taxable.
This is not legal advice, just information. Do your own due diligence.
Sr. Loan Consultant,
It was good chatting with you. We simply have a difference in opinion.
Cash back at closing cheats the lenders, because you are not really buying the house for the value on the contract. This is why lenders don't allow it.
All cash must typically go toward non recurring closing costs.
the list price is 75k and the seller will take less to get out of the home for several reasons (personal matters / home repairs / ac etc.). the home appraises for 75k and it is sold for the contract price of 75k and the seller gives the buyer money after the closing. What law states the seller cannot give the buyer a personal gift for future repairs. It appraised! price was not over inflated! Seller did what he wanted to do with his money!
the list price is 75k and the seller will take less to get out of the home for several reasons (personal matters / home repairs / ac etc.). the home appraises for 75k and it is sold for the contract price of 75k and the seller gives the buyer money after the closing. What law states the seller cannot give the buyer a personal gift for future repairs. It appraised! price was not over inflated! Seller did what he wanted to do with his money!
Can anyone provide clarification on this one? I made an offer on a co-op with a board floor price and appraisal at roughly 130k. It has been on the market for quite some time now as the unit is in need of renovation. I made an offer at around 115k which the seller has accepted. Considering the floor price, I would need to get a mortgage at the 130k price point (keep in mind my 20% down payment) after which the seller would like to return around 15k. Is there any way to have this done legally? The board will not let us go below 130k so that is out of the question.
All funds must be on the HUD1, all parties must attest to no money is changing hands outside of the HUD1. That is the law - don't let anyone tell you otherwise.
If it's not on the HUD, it's not legal (unless it is a refund or return of escrow).
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