Seller want to give me cash back

[jarrettvaughan]

I am interested in purchasing a condo and the seller has offered to charge me an extra 10% on the property and then give me the cash back to supplement my down payment. He mentioned that he does this all the time and has used this technique to purchase many properties. He also mentioned that I should not tell my lender about this.

Is this legal? Do I need to tell my lender that this is happening? If this is not legal or ethical, please tell me why.

I do not want to enter into a grey area and will avoid this if there are any questions as to whether this is ligit.

 

[invst4profit]

If you think about what is actually taking place you will see you are buying a property and qualifying for a mortgage with 0 down (or less than you actually have). This is the reason your seller is suggesting you do not mention to your banker what you are doing. If they know you will not likely qualify for the loan.

Basically it is qualifying for a loan under false pretenses.

Ask your banker.

 

[GarthChapman]

Not grey - BLACK. This is mortgage fraud. You must always disclose the actual price net of any `inducements`.

As a REIN member you should know why this isn`t proper. In plain panguage - it isn`t legal or ethical because you would be lying to your Broker and Lender about the true price and thereby preventing them from making a proper risk assessment and lending decision.

I use a simple method to determine what would be the right thing to do. I ask myself - "How would this fit into the values my parents taught me " or "What would I tell my children or grandchildren about this if they came to me with this question?"

 

[jarrettvaughan]

QUOTE (GarthChapman @ Aug 10 2009, 10:54 AM) Not grey - BLACK. This is mortgage fraud. You must always disclose the actual price net of any `inducements`.

As a REIN member you should know why this isn`t proper. In plain panguage - it isn`t legal or ethical because you would be lying to your Broker and Lender about the true price and thereby preventing them from making a proper risk assessment and lending decision.

I use a simple method to determine what would be the right thing to do. I ask myself - "How would this fit into the values my parents taught me " or "What would I tell my children or grandchildren about this if they came to me with this question?"


Thank you very much. That clarifies everything.