Purchase And Sale/ Help Need Advice
Ok guys, got a deal a million dollar deal structured to find out that my broker doesn't recommend that I do it. Because it might be mortgage fraud.
The seller is selling below market.
They buyer wants to pull equity and put into a land trust.
Seller is SP is 1.1
Buyer want SP for 2.1
Closing HUD 1 shall read 1.1 to seller
1mill to land trust.
The purchase and sale contract will state where the money is being allocated the addtl. 1 mill to the land trust. The investor doesn't plan on immediatley selling the home or anything like that. Please advise, because I don't want to lose out on a million dollar deal because my broker thinks it might b mortgage fraud.
So the seller wants $1.1 million the buyer wants to pay him that $1.1 million but wants the contract to read $2.1 million, I assume so that he can borrow something like $1.6 million and put $500,000 in his pocket at closing.
Your broker is right that is loan fraud and is likely to end somebody in jail if you get caught. I think the last case I heard about was a politician who did three to five. Divide the commission by that number and see if the annual income is one you can live with.
That said. Why is the seller willing to sell for half market price (assuming you believe that the thing will appraise for the $2.1 million)?There are lots of ways to structure this deal that will work without resorting to fraud if the seller is willing to take that much discount.
Misrepresenting information on a mortgage loan application or any documentation as is related to a loan is illegal.
If you structure a deal that is different than the contract presented to the lender, it’s lender fraud.
If a lender detects misrepresentation, federal law provides for those convicted of loan fraud to receive a possible 30-year sentence and up to $1 million in fines!
[addsig]
Everything is going to be on the HUD 1 statement, no misrepresentation. The Lender will know that of the 2.1 only 1.1 is going to the seller and the other 1 mill is going into a land trust. No checks/cash/anythin, is being given to the buyer. They allege that they want to do renovations which will be stipped out in the contract. Am I dense cause I do not understand how anyone is being defrauded if this information appears on the HUD 1.
How else would u structure this deal?
Yes, u r right that is another way to do it. But what I am not understanding is, y would puttin it into a land trust be suspicious, what might happen and if the lender agrees to those terms, is it my place to object and insist the buyer does it another way?