The perfect 0$ Down technique??? - Posted by TheTrain

Posted by lyal on January 27, 2002 at 07:14:06:

The orginal post said the new buyer was getting a mortgage for 130K + 25K down. That’s an all cash deal. Seller doesn’t care where its coming from.
My concern would be that the bank didn’t know going into this that the seller would be giving back 25K at closing. I can promise that there are few deals that would close if the buyer learned at the closing table that he was getting 25K less than he planned. He would have had to have some knowledge prior to closing and the bank would scream FRAUD when they found out.
All the best, Lyal

The perfect 0$ Down technique??? - Posted by TheTrain

Posted by TheTrain on January 27, 2002 at 24:29:38:

Hi Guys,

Just like to know if you heard about a no money down technique that seems too good to be true but was signed by an attorney a few months ago saying that all of this was perfectly legal. It goes something like this…

The buyer made an offer on a duplex for 155,000$ and got a new mortgage for 130K and had to come up with 25K as a down payment.

But at the closing table his attorney add an addendum clause on the contract stating that some major rehab work had ben forgotten and the seller should substract an amount of 25,000$ to the property bringing it now at 130,000$ which is the price of the new mortgage he was getting by the bank to buy it.

Since the mortgage is 130,000$ and that the 155,000$ price offer has been dropped to 130,000$ (thanks to this 25k addendum) the buyer seems to buy the house no money down.

If this “addendum thing” really exists, then how come anybody did that sort of deal and how come the bank didn’t lower the mortgage from 130K to 105K since that addendum lower the home value from 155K to 130K.

Help me here, i really don’t get this one…



Re: The perfect 0$ Down technique??? - Posted by GL(ON)

Posted by GL(ON) on January 28, 2002 at 14:29:58:

I have heard of deals like this being done, with the knowlege of the bank, back in the 80’s. I think I bought some of them under power of sale for a fraction of the mortgage in the early 90’s.

Needless to say, the banks stopped doing them a long time ago.

Re: The perfect 0$ Down technique??? - Posted by Chris O. (WA)

Posted by Chris O. (WA) on January 27, 2002 at 03:09:01:

Down payment at a percentage of the sale price and bank mortgage amount aside, the down payment that the seller is asking doesn’t have to change just because the value of the house does. If the seller wants a $25K down payment and says he’ll take $155K, then says he’ll take $130K, where does he say he no longer wants the down payment of $25K?

The seller doesn’t necessarily care why you’re only willing to pay less than you were the first time you offered to give him money for his property, he just cares whether he’ll take the money you now say you’ll only give him for his property. From the seller’s point of view, before your “addendum thing” proposal at closing, he was going to get $25K cash and $130K in bits. After the “addendum thing”, he’s going to get zero cash and $130K in bits. If that makes sense to the seller, then you’ll get the property for no money down. If it’s a worse deal in his mind, despite any renovations it may or may not actually need, then you won’t.

Am I wrong?
Chris O.

Re: The perfect 0$ Down technique??? - Posted by The Train

Posted by The Train on January 27, 2002 at 12:54:53:

Hi Chris,

Yup , your right and i forgot to mention it that this was a deal between the buyer and the seller in order to avoid the 25K down payment.

The seller knew that the addendum would bring back the 155k price to 130k which is the amount the buyer will get from the bank in his new mortgage.

THe only thing i need to know here is…DID THE BANK KNEW ABOUT THE 25K ADDENDUM REDUCING THE HOMEPRICE FROM 155K TO 130 and if they did (!!) why did they maintained the 130K mortgage?

Guess i’ll have to come back to you guys with the answer on this.

The Train