is this illegal??? (loan, credit, loan, property)

[itsjinx]

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!!

[TimtheGuy]

Looks like the house is actually worth $160k ($250k-90k paid by seller).
A lender will not give your buyer a loan on it based on your scenario.
Why would you want to sell it this way??

[itsjinx]

I have been told that the lender, who is legit, only rejects it 1 out of 10 times, so that isn't an issue apparently. Since its on the HUD i was told it isn't illegal.

the purpose of this scenario is to simply give incentive to a potential buyer... other thoughts?

[renriq02]

it's not illegal if the lender knows of it...and the HUD clearly states that there will be given 53k cash from the seller at closing.

You will need to have an attorney to make sure it's written properly.
I wouldn't have the attorney from the buyer or the lender...
I would pick an independent attorney who will have your best interest in mind.

This lender will probably portfolio this loan as FannieMae/Freddie Mac prohibits this.

[TimtheGuy]

The lender would be a real idiot to put this loan on their books. Why would a lender want to lend $250k on a $160k property?? Your buyer could take the $53k in cash and never make a payment.

I do portfolio and secondary market lending and I would laugh this scenario out the door.

[renriq02]

yep...that's why a 3rd party attorney may view what's going on.


If they insist on using their attorney/title company, then you need run!

[pghquest]

Originally Posted by TimtheGuy

The lender would be a real idiot to put this loan on their books. Why would a lender want to lend $250k on a $160k property?? Your buyer could take the $53k in cash and never make a payment.

I do portfolio and secondary market lending and I would laugh this scenario out the door.

Agreed, I'm doing a closing in the next couple of weeks where I'm getting $9K back, but only after I put $16K down. The banks even questioned that.. (repair credit for new carpeting etc)

[pghquest]

Originally Posted by itsjinx

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!!

Long as everythings disclosed, it wouldnt be illegal. If you find the bank doing this deal, please PM the bank so I can push some other deals I'm doing past them..

[renriq02]

not necessarily true.

there's a lot of stuff being disclosed but still doesnt abide by federal or state laws.

carpet allowance is also not allowed for FNMA loans.
If the lender portfolio's it..then that's different.

I dont know any lender that does carpet allowances.
Usually this type of stuff is done at the parking lot of the attorney's office.

[kimrocktherealtor]

question similar to this..
if "furniture" is an option (but not a requirement, as in a model home) - can a furniture package be financed? or will a major bank have an issue with this?