Is This Fraud?
I have an investor friend that just called and asked what I thought about a refinace option he wants to do.
He is purchasing a house for 155K but only paying 100K right now in cash. The seller is holding back a second for the 55K for 7 years, no payments or interest, just one balloon at the end of 7 years.
His P&S contract shows the purchase price of 100K. He wants to get his cash back by refinancing it right after he closes. The mortgage company he is going through can do it but only at 70% of the purchase price. He said he can have the purchase price on the P&S say 135K so he can get the 100K back out.
The lender needs to see the P7S contract.
Can this be done and what are the ramifications?
Thank you
Thank you Comm,
I have copied your post and sent it to him. I figured it was but he insisted that it was not based on the total sale price.
Anyway thank you again.
Yep, that's about as fraudulent as you can get. I wouldn't touch it with a ten foot pole.
[addsig]
Speaking of ten foot poles. I had a call from an old client who wants to do almost the same thing. He asked me my thought and I asked him what was his thought.? If fraudulent forget it. I think he will not forget but will fudge an appraiser and the nice loan office or mortgage broker and try it anyways. Nice to know it is being attempted elsewhere other then in LaLa land.
Cheers Lucius