I received a call from a young lady the other day. She said she had gone into a Detroit home being showed by a metro Detroit real estate agent. The buyer said it was a very nice home. She was calling me to get pre-qualified for a mortgage.
As she explained what was going on with the home purchase I quickly decided I wanted nothing to do with this deal. The real estate agent was going to commit fraud. The asking price was $95,000 for this Detroit Home. The real estate agent/seller was going to give the buyer $20,000 cash back on the day of closing. It was not going to be disclosed on the HUD Settlement statement. The lady said that way the bank would not know about it.
This is fraud!
You can not get cash back on a home purchase and not disclose it to your mortgage company, or the cash back is not disclosed on the closing paperwork. It is fraud plain and simple. To this lady it was a lot of money. A half year of work. Who wouldn’t want that cash.
But what she didn’t understand is that she was borrowing the cash, that she would be paying interest on the money, and that she was overpaying for the home.
All she saw was the $20,000 cash. Probably more money that she has ever seen at one time. No wonder she was sucked into this deal.
She went her way to find another mortgage lender because she would not listen to me. Good luck because she is going to need it. So if the seller, mortgage person, or real estate agent offers you money back on the side….. Run