Another Scenario..
Can I do this?
Purchase a property for 370k from seller and the appraisal was 415k.
If I had it DISCLOSED on the HUD-1, and the LENDER APPROVES of the 45k difference to be used partially for closing costs, and the remainder of the balance is paid out to a LLC to subcontract out for finishing the basement and updating the home and if the money leaves a paper trail showing that it was paid to contractors for all the work done and materials bought, is this still considered fraud?
I have read over and over again and I am getting mixed feelings about what I have read. SO any advice would greatly be apprreciated although I know there may not be LEGAL ADVISORS around.
THX
**I edited the LLC subcontracting out the work**
[ Edited by TNproperties on Date 02/03/2006 ]
[ Edited by TNproperties on Date 02/03/2006 ]
Thank You all for the info.
Yes, the amount to the LLC WILL BE DISCLOSED ON THE HUD-1, and the LENDER is aware of it. There will be only ONE HUD-1 form that are both the same for buyer and seller. No BS such as one HUD-1 for seller, and one seperate one for buyer which is what the lender sees. From what I have read up on and been told thats a big no no.
Another question is, what if my gf was buying the home solo, and the LLC was owned by me....and I am also GOING to have contractors do all the work. But my concern would be that people may think its funny because of that fact. I was also told that as long as SHE DOES NOT received ANY funds then we are ok.
Are there any mortgage brokers or loan originators out there? I believe that the lender will lend on the appraisal or the purchase price - whichever is lower. I do not think that it is relevant that the difference between the purchase price and appraisal is 45k or that is all you can use for repairs. When I bought my house for say 100k, I also had 25k in escrow to build a pool. My final mortgage amount was for 125k. It was a special kind of loan that allowed for two closings. it had nothing to do with the appraisal value of the home.
I assume your attorney is a divorace attorney? The quick claim may not be relavent if CA is a state where assests are split between husband and wife.
Quote: including agreement for deed with some money into the deal
By some money into the deal - you mean consideration for the deed? And what do you mean by agreement for deed - did you have a land contract from the owners? Or do you mean that they never signed the warranty deed to trustee?
What exactly did you do to the property that came to $50K?
I think everyone has had a deal like that.
So far I have only done one foreclosure and I videotaped the process because I have heard stories similar to your before.
Sounds like you need someone to step in and renegotiate this deal for you.
Why you would give money without a deed is beyond being stupid...
On one of my past post I got beat up by other posters who thought my 21 page contract and requiring a power of attorney from the seller was over kill.
Well this is a perfect example of why an investor should have all of your documentation and items in place or don’t do the deal..
BTW have the policy Cash for Deed cash for keys.
And God bless you!
_________________
Michael Quarles
"Marketing is the key to Successful Investing"[ Edited by IBuyHousesInc on Date 01/26/2006 ]
I know, live and learn and hopefully others will learn from your mistake Brother MikeBuysHouses
(1) Paid too much for the property. You agreed to pay 162 for a house that you thought was worth 195. Ron Legrand preaches the MAO, which would have indicated that you should have paid 136k for the property if it was in move in condition.
(2) Too much money was paid out of pocket. - especially for the high price paid. You gave them 37k in cash and was going to pay off credit card debt. That is a lot of money out of pocket. I would have paid that kind of money out of pocket if there had been say 100k in equity.
(3) Gave money while they were still in the house. Do not give them any money, unless it is for apartment deposits, until they are out of the house.
Sometimes we are so eager to do the deal that we forget the basics.
Hey, I let my handyman move into a house of mine today with no lease in place and no security deposit. Hopefully I will not be writing for legal help soon. And yes, I also know better.
Did you not buy title insurance? Go through an escrow?
[addsig]