I’m new, can’t quite get the hang of the search field so I’m going to ask this question:
Say a builder gets established to become a builder with the financing of a mortgage broker friend. This builder is now beholden to said mortgage broker.
Builder builds a house that he wants to get $230,000 out of the deal but the home is valued at $320,000. He tells mortgage broker he wants to seel quickly.
Mortgage broker keeps a list of investors. He says to buyer, “I will help you get a 100% loan on this house for $300,000. AFTER closing, the builder will turn around and give us $60,000 to split for you buying this house (the other $10,000 is closing expenses etc).”
Is this truly legal? I’ve heard it said that you cannot get a seller ‘kickback’ AT the closing table but what you do afterwards is no one’s business but your own.
My husband has been approaced by the broker to do a deal like the above, is it safe and legal?
What the seller does with the proceeds is no ones concern except the IRS. Where problems have risen in the past is when buyers and sellers and brokers and appraisers worked together and got way over inflated values and appraisals and defrauded the mortgage companies. As long as you can qualify for the loans and do not commit loan fraud and the value is there and can make the monthly payments there should be no problem.
on paper this looks like a classic mortgage fraud set-up. by definition, this is a non-arm’s length transaction due to having a undisclosed side-deal between buyer and seller.
I ask the following questions:
1)if he wants $230k fast, why not sell for $230k? if this is truly a deal, he would have people lined up at 5am at his doorstep.
or
2)sell for $300k and do an owner carryback of 20% (which is later forgiven); have a lender do a 80% 1st note.
what are you going to do if he does not pay you the 60K?? go to court; good luck explaining to the judge about the after-closing side deal.