Posted by RickG on August 27, 2003 at 20:52:23:
Ralph, first, for the record, it was not and is not currently my intention to accuse you of engaging in criminal or fraudulent activities. I wrote my previous comments and I write this reply with a sincere hope that you will carefully consider all potential ramifications of your actions should you proceed with the arrangment suggested by the buyer. Secondly, all comments are strictly my personal opinion and should not be construed as providing anyone legal advice or a legal opinion. I think you were wise to consult with a lawyer regarding this matter.
For a general article on criminal conspiracy please see: http://f.about.com/z/js/spr09sm.htm
If you are an experienced REI then you have no doubt developed contacts with the mortgage and finance industry and you should discuss with them what the ramifications of submitting false loan documents can be. Loan documents are commonly and routinely sold by the lendor and the subsequent buyer (often times the Federal Government or an entity financially supported by the Federal Government) will end up with the paper. Inflated house prices in which the amount of the loan was greater than the amount of money that actually changed hands between the buyer and seller is what led to the recent seasoning rules by the FHA and massive financial losses (which in turn has triggered heightened regulatory and enforcement activities). And yes I realize that you personally will not be submitting the loan application to the financial institution; however, do you want to potentially put yourself in a position where you might have to explain to a jury why you, a professional rehabber and REI, put one price on a legal document which you either knew, or should have known, would be submitted to a financial institution and then executed a second document for (in your words) “the sales price of $99k”? Why two different documents? Why couldn’t this arrangment be set out in full detail within the four corners of this one document? I don’t believe the fact that you do not sign the buyers loan application documents will completely insulate you from all future potential legal liabilities from this type of arrangement.
Do you really need to enter into this type of arrangment to sell your house? Just things you might want to think about… I wish you the best.