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Mortgage Fraud: Always say "No!"

Sherilynn

Real Estate Maven
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Joined
Oct 22, 2007
Messages
2,803
A couple of our Tenant Buyers are currently working with a mortgage broker to obtain financing to purchase their lease option property. The mortgage broker convinced the buyers "some banks are hesitant in mortgaging lease to own properties and sometimes in order for the mortgage to take place sometimes you have to be creative in getting it."

Further advice from the mortgage broker regarding proof of down payment had the buyers tell me we need to sign a "gift letter" stating we were gifting the down payment to the buyer. "Also since bank only lets relatives gift money we would have to say you are his cousin."

This is FRAUD! And what is worse - this mortgage broker is convincing buyers they have no other choice but to commit fraud!

Of course, we at QDHomeQuest will have no part in that. We assured the buyers "we have successfully completed many sales to clients without resorting to making untrue statements," and proceeded to explain how we do that. We also suggested: "If that doesn't work for your bank or broker, then we'll work on finding you a different bank or broker." (We work with bankers who understand the service we provide and are able to get mortgages for our clients.)

These are good people, and have been excellent clients, and it irks me a so-called professional had these people convinced their only option was to break the law.
 

Thomas Beyer

0
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Joined
Aug 30, 2007
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13,881
So what do the banks want to hear where the cash to close is coming from for the TB to qualify ?

Cash AND the sum of lease option deposits, i.e. a statement by you stating X upfront and Y times Z over the last 24 months is what banks want to see ?
 

Sherilynn

Real Estate Maven
REIN Member
Joined
Oct 22, 2007
Messages
2,803
For all of the sales we have closed, we have provided the bank with our accounting ledger showing all option payments received. The tenant buyer provides his bank statements or cancelled cheques showing matching amounts. That's all they really need.

Some banks also like to see all option payments - now considered the purchase deposit - put in trust with a lawyer. There is no logical reason for this, since we (rather than the buyer) put it in trust with our lawyer and then get it back in a couple of weeks in the form of sale proceeds, but if it makes the bank feel better because that's what they're used to - then I'm happy to do it.

The key is the tenant buyer must work with a bank that accepts lease option purchases. We have had great success with TD, and we have a mortgage specialist at TD who works magic with our RTO clients.
 
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