Re: Giving Seller huge money back after short sale - Posted by lukeNC
Posted by lukeNC on June 26, 2007 at 10:00:11:
good point…
If he could get the lender to accept the discount, why not give the guy $50k of his own money as a separate transaction?
Sounds fine to me.
Note purchase and short sale not even close - Posted by JT-IN
Posted by JT-IN on June 26, 2007 at 12:24:14:
These transactions are not the same at all. You can try to stretch this so that you rationalize what it is that you WANT TO DO, but it is NOT going to change the facts.
If you do a short sale and the lender has conditions for which to execute the short sale, and one of them is the Seller receives NO proceeds from the sale, that is exactly what it means. Any attempt to do any maneuver under the table is defrauding the lender. If you do so in an amount of 50K, I would say that is an event that could draw some interest from your local FBI office, if discovered.
On the other hand, if any Lender sells paper to an investor or another Lender, it is pretty much understood that you are buying the paper to profit, and free to do what it is you want to do, within the limits of the law, as a Creditor. Then if you wish to allow a short sale with NO stipulations as to what a seller can receive, then you are free to do so.
A predisposition in an attempt to justify where you want to end up, can get you into some trouble… especially when you are dealing with (deceiving) a business in a highly regulated industry. But then folks who tend to not hear what they want to hear, usually fight this kind of input.
It is what it is, no matter how you try to wrestle it around. Unless the payment to a seller is disclosed, providing the lender has a restriction against seller’s receipt of proceeds, then the act is FRAUD. Buying the note and Mtg (or DOT) is a whole other matter.
Let’s face it… if a seller in a short sale transaction ends up with a couple grand in their hand, it doesn’t make it right, but it is done frequently… (sale of personal property; the reason and dollar amount are at least plausible). A 50K kick-back to a seller is a whole different matter, and will certainly bring much more attention upon you, as the purchaser and engineer of the transaction, if this info were to become knowledge of the wrong party.
I watched some show on TV late last night and it was about some 100K Bank heist. If this 50K kick-back event goes away, maybe this dastardly deed will be highlighted next on TV.
Re: Giving Seller huge money back after short sale - Posted by michaela-CA
Posted by michaela-CA on June 26, 2007 at 10:13:55:
Maybe the seller owns a very special Rocking chair, that he would like to sell to Brian for 50K 
Re: Note purchase and short sale not even close - Posted by Brian_wa
Posted by Brian_wa on June 26, 2007 at 12:27:01:
What if the bank doesn’t say anything about the borrower cannot receive any money? On their settlement statement, all they say is that they would agree to settle the account in full for xxx dollars and simply provides instructions to send the money…
What then?
Brian
Re: Giving Seller huge money back after short sale - Posted by BTI
Posted by BTI on June 26, 2007 at 22:24:55:
Michaela
Had to laugh at your post, it reminded me of when I was a young man and the forty-thieves were hanging out at all the trustee sales.
I didn’t have the funds to bid on the properties but I would flash a cashiers check ($10) and a Kansas City bankroll, I also had a clip board with the addresses in large letters of what I thought the thieves would be bidding on. Well usually one of the bidders to be would say how about a $100 to take a hike, I would stammer and say but I can make a ton if I get the winning bid, and their stock answer was my chance of winning the bid was next to zero and the money was a sure thing. After while they knew they could pay me to take a hike. They knew I bought properties but they didn’t know they were all preforeclosure.
Anyway, California passed a law against that sort of activity so I would sell my $2 Timex watch with a lot of sentimental value to them and take a hike. Next time they saw me they would gift it back because they hated to see me without something I loved so much. A few years later I would be actually bidding on properties but from time to time someone would buy the same watch.
BTI
Re: Giving Seller huge money back after short sale - Posted by lukeNC
Posted by lukeNC on June 26, 2007 at 15:40:47:
say its before the actual short sale closing takes place? Can he not give him $50k of his own money before going to closing on the short sale? How is that illegal?
Re: Giving Seller huge money back after short sale - Posted by Justin-NFL
Posted by Justin-NFL on June 26, 2007 at 11:35:11:
exaaaaaaactly.
Imagine this… A Shareholder… - Posted by JT-IN
Posted by JT-IN on June 26, 2007 at 15:09:10:
Or Member, in the case of a Credit Union… finds out after the fact that the Institution allowed such an event to close and did NOT stipulate that seller cannot receive proceeds from the sale… What say you, Mr Shareholder, when you learn that YOUR employee just threw away 25K or 50K… Absolutely left that money on the table, due to personal negligence. My guess is that you wouldn’t be too happy.
Now, are you posing a statement or a theoretical question here…? Did the Lender state “X payoff amount, with NO stipulations”…? Or, are you asking “IF” that is what the Lender says, is it OK to kick-back seller…? My guess is that it is the latter, theoretical question, not the former. If the lender had not stipulations then there is NO need for a kickback. Just put it on the HUD… as Check to Seller… There could be a reason why you don’t want to risk that… (chuckle to self).
Re: Note purchase and short sale not even close - Posted by Dave T
Posted by Dave T on June 26, 2007 at 14:54:20:
Did the lender ask for a purchase and sale agreement on a state approved form? If so, then the standard form generally stipulates that the written agreement is the sole agreement between the buyer and the seller.
Signing this agreement and presenting it to the lender as your short sale supporting documentation while having an undisclosed side agreement with the seller is loan fraud – a felony. If the lender is a federally chartered institution, then you go to a federal penitentiary when convicted.
Additionally, as a general rule, as part of the short sale supporting documentation, the lender will ask for a “net sheet” or a HUD-1 which documents how all the parties in the transaction are compensated. Submitting a “net sheet” or HUD-1 which shows that the seller gets zero, while having a private agreement to rebate $50K is another route to loan fraud.
Disclose everything to the lender, put the $50K rebate to the seller on the net sheet, and you are on firm legal footing if the lender approves the structure of your deal.
Re: Giving Seller huge money back after short sale - Posted by michaela-CA
Posted by michaela-CA on June 27, 2007 at 06:53:50:
lol
Demonstrate the normalcy of that move…? - Posted by JT-IN
Posted by JT-IN on June 26, 2007 at 16:19:19:
You can’t… The TV show “Millionaire” went out of production in 1960. Since, I don’t think folks have gone around giving out that kind of $$$ to folks for the kicks of it.
Now factor this in… “Oh, you just took title to a property from Mr. Seller, and you what…? You want me to believe that there was NO INDUCEMENT involved…? Now listen sir, I might work for the Gov’t, (FBI), and I may have been born at night, but not LAST night. This might be the flimsiest alibi since I worked on the OJ case…”
I guess they didn’t buy the story that there was NO connection… nor contractual or conditional agreement.
JT-IN
Re: Giving Seller huge money back after short sale - Posted by michaela-CA
Posted by michaela-CA on June 26, 2007 at 16:04:46:
and what if the seller doesn’t want to sell afterwards? Now he has the fund sto cure any default.
Re: Note purchase and short sale not even close - Posted by BTI
Posted by BTI on June 26, 2007 at 21:46:08:
Dave
Agree with your post. It also reminded me of times in the past when things become a common problem, the government likes to pick out someone and make an example of them to put the public on notice. It seems like the participants of something like this could become the next example.
I remember back in 88 or 89 some poor smuck in the Los Angelos area was used to make out the point of fudging on mortgage application’s. Five years before he had “error-ed” on the status of his part time job, not his full time job. They seized his home and took it over and fined him a ton, but no jail time, and he hadn’t missed a payment in 5 years. When I read of his “error” on the application I didn’t think it was truly that serious but they didn’t ask for my opinion on the matter.
With the number of short sales growing the chance of someone being selected to keep people in line is growing too.
BTI
Re: Note purchase and short sale not even close - Posted by RichV(FL)
Posted by RichV(FL) on June 26, 2007 at 17:44:51:
Dave,
You’ve got it. Disclose everything to this lender, put the 50K on the darn net sheet or Hud 1 and see what the lender says. Either it will be a yea or a nay. If its a nay you move on to the next deal.
Disclosure is the only way to make this work…if it does.
RichV(FL)
Demonstrate the illegality? - Posted by lukeNC
Posted by lukeNC on June 26, 2007 at 16:52:55:
I’ll forget the fact that you are not an attorney. You appear to know alot of things though, but not everything.
Your vivdly described dialogue there is something out of a illegal stock deal or hedge fund fiasco. Where there ARE regulations and laws against inducement.
Now, of course its not normal, but how is it illegal?
The short sale payoff letter – the ones i’ve seen, state that simply that the borrower cannot profit from the transaction, meaning no profit can show on the HUD from that deal. I’m following that to the T.
If I pay upfront for the right to buy at that price have the house deeded to myself or a land trust THEN later do a double or simo close with my buyer, how is that illegal? UNLESS there is some federal law saying I cannot do that?
Remember, this is not stocks, this is not a loan application. This is a short sale.
Re: Giving Seller huge money back after short sale - Posted by lukeNC
Posted by lukeNC on June 26, 2007 at 16:19:06:
give $50k, deed to land trust. Then simo or double close with his buyer. Simple…
Re: Demonstrate the illegality? - Posted by BTI
Posted by BTI on June 26, 2007 at 22:29:56:
Luke
And how is the seller going to keep claiming hardship if he now has $50,000 in his pocket?
BTI
Not stocks, not application… it is… - Posted by JT-IN
Posted by JT-IN on June 26, 2007 at 18:41:54:
Bank deception, plain and simple.
You state: “the ones i’ve seen, state that simply that the borrower cannot profit from the transaction”.
You can stack the simo, land trusts or duma-col-its to the ceiling… and IF the transaction you describe comes on the radar screen of a someone in the enforcement path for Federally chartered banks, etc, you got a big problem… IMO. Anything that MASKS full disclosure is a problem when dealing with a bank… and placing 50K in the hand of a seller of a short sale is full blown deception; period.
Smoke, mirrors, simos and trusts aren’t going to cut it…
JT-IN
Re: Giving Seller huge money back after short sale - Posted by BTI
Posted by BTI on June 26, 2007 at 22:36:24:
Luke
What does the trust do? The loan is still in the sellers name, is a trust going to declare hardship?
BTI
Re: Giving Seller huge money back after short sale - Posted by michaela-CA
Posted by michaela-CA on June 26, 2007 at 16:53:39:
Since it’s ‘intent’ that si the deciding hting here. So, whichever way you make an agreement on the side with the seller, without letting the bank know about it, it’s fraud.
Sure, there may be ways, that it won’t get detected that easily. But basically, it’s someone’s moral/ethical compass that’s making those decisions on whether to do or not to do the deal.
Michaela