Re: Flip Profit shown as 2nd mtg on HUD-1? - Posted by Jack
Posted by Jack on July 14, 2002 at 19:40:31:
The blank deed is OK…but how do you have a purchase agreement between the old seller and the new buyer when the old seller is long gone? How do you sign the HUD1 at the closing using the old sellers name?
And while we are on the subject…if you sold the house in the old sellers name…wouldn’t the profit check be made out to the old seller? And the resulting tax reporting required by law? How would you cash the check?
Many would answer “Power of Attorney.”
Don’t say “Power of Attorney”…it is my opinion the PA by its very nature infers a fiduciary responsibility. The seller could come back and say that all the profit should be his.
I guess that you could have a separate, written contract that allows you to make money at the expense of the seller…
Additionally, there is now (in may many cases) lien seasoning. Lenders today are asking that the 2nd mortgage (or for that matter, all liens) be seasoned sometimes 12 months… so that won’t work.
This is a BIG problem that I brought up at the convention in the Lobby at 2 in the morning. Most of the people in the room at the tiem did not see this as a real issue.(Of course, most were in no condition to talk about it anyway.)
Regardless, now, several months later, a great many of us have posted the same or similar problems.
I am working on answers. I have been for quite some while. I have some real life, practical solutions, but would first like to get some feedback from the board.