Posted by River City on May 05, 2005 at 06:32:51:
Sorry, Natalie. We get so many requests of how to “screw” the lender, that most of us thought this was another one of those cases. Anyway, you looked at this objectively and presented a very good response.
Is this legal? - Posted by Mike
Posted by Mike on April 27, 2005 at 13:18:50:
I’m looking to buy a 4 family investment property.
Asking price is 400K. What I?m trying to do is find a way not to put 20% down payment.
So I gave an offer for 450K with 50K as repair credit to the buyer at a closing. This way my mortgage will be 80% or 360K against sale price of 450K and not 320K against sale price 400K. Property will be cash flow positive even with 100% financing.
Is this a legal approach or should I consider something else.
Thank you in advance for all advices
Mike
Re: Is this legal? - Posted by Natalie-VA
Posted by Natalie-VA on May 04, 2005 at 07:26:15:
Mike,
You’ve gotten some interesting answers. John summed it up pretty well, but let me reiterate: as long as the lender knows what you are doing, it’s all disclosed on the HUD and the appraisal legitimately comes in at or above the sales price, you are fine.
If the appraisal is falsely inflated or you don’t disclose something to the lender, then you’ve got a problem.
Re: Is this legal? - Posted by River City
Posted by River City on May 04, 2005 at 06:29:55:
Of course this is illegal. Any time you say a mortgage transaction is different than it actually is, it is illegal. This is perpetrating fraud against the lender and is punishable by fines and imprisonment. Read the fine print on the mortgage loan application.
Re: Is this legal? - Posted by John Merchant
Posted by John Merchant on April 29, 2005 at 21:02:50:
To sign a HUD1 with anything other than absolute facts is to commit Federal fraud…no matter what the lender might or might not see or perceive.
Re: Is this legal? - Posted by Dan Fortney
Posted by Dan Fortney on April 29, 2005 at 19:54:08:
I’m not a lawyer, but this sounds like fraud to me… see http://www.creonline.com/real-estate-financing/wwwboard6/messages/46044.html
Re: Is this legal? - Posted by Jimmy
Posted by Jimmy on April 28, 2005 at 10:20:38:
I think you are fine when it comes to legality.
If your lender is awake when the read the offer, they will see what you did. if so, don’t expect them to embrace your idea enthusiastically.
but if the lender does not catch it, and the appraisal comes in at or above 450K, then you win.