Eisrael Gomez Realtor - Monterey County Blog

Here is another question we've been faced with more and more.  One of my clients suggested I blog it, so I thought I would discuss it today.  I've excluded names and changed amounts to protect the innocent!

We have a buyer on a property and my seller needs to sell!!  My seller has listed the property at $500,000.  The buyer's offer is for $600,000.  The buyer will be getting a loan for $600,000.  He is requesting for the seller to give the extra $100,000 back to him in cash at close of escrow.  What to do you think?  Deal or no deal?

No deal buddy!  According the legal department at the California Association of Realtors the amount of cash being returned to the buyer at close is many times a RED FLAG that mortgage fraud may be involved.  There's already lot's of talk in the news about this (see some of my previous blogs or emails).  The reason it's fraud is because under federal law, mortgage fraud includes anyone who willfully overvalues a property or with knowledge makes a false statement for the purpose of influencing a federaly insured mortgage lender or other lenders.  In order to receive the $100,000 cash, the buyer would have to show the lender that the purchase price of the home listed is really $600,000, when in fact it's only $500,000.  Most likely, the cash to the buyer is "under the table" & is never disclosed to lender.  The legal department says:  "This price inflation scheme is very likely to be illegal." 

For more information, check with your local FBI agent or visit http://legal.car.org  :-)

Please let me know if you think this info was useful to you?  Or do you have a future topic you would like me to discuss.  I would love to hear about.