Indictments issued in HUD scam
A Florida man was indicted Thursday of defrauding the U.S. Department of Housing and Urban Development through his real estate company after 4 of his employees pleaded guilty. Eugene McReath of Panama City,Fl. owns Southern Construction and Investments, a Birmingham,Al. based company that buys,renovates and sales houses for a profit. According to the indictment. Many of the houses that McReath sold were financed with HUD loans. McReath is accused of paying his buyers down payments,then falsely telling HUD that the down payments came from relatives of the home buyers. The prosecutors say McReath lied to HUD to get around the department's policy of not insuring home loans when a seller make a down payment.
Could you post a source for this news article?
I am amazed that one would have to falsify those DP's as a gift when all you got to do is look at the Governments web site to learn how to do the exact same thing legally!!!!
YES!! Legal 100%, maybe some regulation prohibits repeated Donations that further a business enterprise's use of this technique,but they recognize the use of a 501 c3 tax exempt charitable organization to act as a conduit that gets around their very own regulations.
Thats the other half of this story . And once again we have proof that ignorance costs dearly. Proves the worth of this web site for learning purposes alone.
Wannabe's will focus on the negatives, thinking that investing has its shadow world of criminal activity, fraud and deception.
When it's really a perfect example of Dumb and Dumber trying figure out how to get on the bus.Stubborn hard heads should not be confused with persistance and determination that are essential components of a serious entreprenuer's character.
Invest in yourself first and live your return on investment. Education is not optional, if you stick around long enough, you pay for it anyway, but we call it growth.
Okay, I'm off my soap box, thanks.
So your saying that you need to create a charitably organization to give away the seller down payment?
Could, but look at the HUD web site first,and see what they say. Keith
You don't need to create a charitable organization to do this. There are several programs that "launder" down payments for lack of a better word. Neighborhood Gold, Nehamiah, etc. All you need is one form, usually available on the organization's website. This becomes part of the contract and your title/ closing company should be able to handle the rest. One of the most important aspects to real estate investing especially when it comes to "flipping" properties, is that you make your property easier to get into than any other on the market. This is easily acheived by offering a down payment grant. It also provides you with a tax deduction -- perfect for off-setting your capital gains tax on the property!
Best of Luck,
Casey Ellsworth, Broker/ Owner
SourceOne Realty Sales & Investments LLC
Hey ,
So does that mean that if we get a chance to buy a property and the seller will offer the downpayment as a seller second we need to open a charitable enttity to do the deal ? Thanks in advance. Just a new investor trying to apbsorb what I can?
P.S. I have read a lot on re investing . Anything particular that you recommend ? Again many thanks in advance ......
"The prosecutors say McReath lied to HUD to get around the department's policy of not insuring home loans when a seller make a down payment"
Am I misreading this? should it read when a seller DOES not make a down payment?
IOW why would they not want to insure it if the seller made the down payment? That's the part I don't understand