Posted by diana on August 02, 2003 at 13:21:41:
Can do. Please email smclp@mchsi.com
What a dilemma! - Posted by Joe
Posted by Joe on July 31, 2003 at 19:58:35:
I “sold” a house on lease/option about 10 months ago. It has about $60,000 in equity. The tenant/buyers are working with a mortgage broker I referred to them. The broker thinks they have a chance to get financed based on FICO. Good news so far. But here’s the problem.
The broker wants a letter from me stating that the tenants had zero payments 30 days late, zero 60 late, and zero 90. Well, the tenants have had a couple of 30 day lates in 10 months. The husband has had trouble keeping a job and got laid off twice since moving here from another state. He eventually got all the payments straight.
So, if I want to get my $60,000, I need to fib about the payments. I don’t like fibbing, especially when it has the possibility of being deemed as fraud. Don’t get me wrong, I’m not taking that possibility lightly.
But here’s the rest of the story. My business is very very close to banktruptcy. I’ve had a run of bad luck with finding good deals for several months. I do REI full time and my family depends on my income. We’re very close to going down. My wife and kids need this money. It would get me started again (I know this run of bad luck isn’t going to last forever). And it would keep my family in shoes and twinkies for a long time.
The broker said he only wants a letter from me. I asked if lenders will ask for bank statements to prove the payments were on time after they have my letter. He said it depends on the lender. Now what would happen if I fibbed in the letter, and they later came back and wanted bank statements or cancelled checks? I could refuse to give them, stating it’s private info, I guess. Sounds transparent as he11 though.
My tenant knows he paid late. I’m a very truthful person, but darn it all, my family and business are top priority. Could I go to jail if I fibbed about a stupid late payment or two? I know people who do a heck of a lot worse than that and they aren’t even about to go under.
Any thoughts? Feel free to berate me for thinking about it. Unless you are in this position, you couldn’t know.
Re: What a dilemma! - Posted by Sean
Posted by Sean on August 04, 2003 at 24:06:40:
At the end of the day you have to make the call… is the sale of this property the ONLY way you an get cash? You have no bridge financing options? Credit cards? Relatives? Any other way you could cash these people out? Or get to some of that equity?
Have you considered owner financing, wrap around mortgage etc and selling some of the payments to a note buyer? This might get you some of that cash you need today, and still give them more time to get a full refi done…
Remember, the house will sell, and the seller will get financed… its just a matter of WHEN. Face it, if the only thing keeping them from getting a loan is a letter saying they have zero lates, then they aren’t in that bad of shape.
Best of luck.
the problem with getting a new lender - Posted by rm
Posted by rm on August 02, 2003 at 07:46:34:
If you try to find another source of funds, you’re adding a whole host of new problems.
1- You’ve stalled the process, adding more delay to getting the funds in your hands.
2- There’s no guarantee that the LO will find someone to take the deal.
3- Very few lenders will do a loan without a rent ver.
4- The new lender may have additional, last-minute requirements that complicate the process. Just closed one Thursday- we were forced to switch lenders 12 days before closing. They wanted more docs, different docs, and, we found out at closing an additional $1,600. It was unusual to have a buyer who was able to comply with all these last-minute issues.
5- If sufficient time has passed, their credit may have to be pulled again. If they’ve been late on anything else in the meantime, your deal is dead.
6- Murphy’s Law of RE Closings: Problems multiply with the passage of time.
7- Another lender might be able to do the loan- but at a higher rate, which might make the buyers less willing to move forward.
If taking a second would solve the problem, maybe that’s the way to go, but at this stage, any changes you make are going to add time to the process.
Nobody on this board, or anywhere else, is qualified to advise you as to what to do- as none of us are in your shoes.
And if you’re honest with yourself, you already made your decision before you even posted here. What you’re really looking for is someone to confirm the choice you’d already made.
My hope for you is that whatever you decide, it produces results that moves you in a direction where you never have to make this sort of decision again.
Best of luck to you.
Re: What a dilemma! - Posted by Jake
Posted by Jake on August 02, 2003 at 07:33:41:
The Lord works in mysterious ways. Do what’s right!
Don’t Be Silly - Posted by John Katitus
Posted by John Katitus on August 02, 2003 at 03:13:51:
Your home life and your business or a minor fib? Unless your home life and business are a lot less important to you than mine are to me the answer is obvious. You have to realize that being in business means that occasionally - and certainly as seldom as possible - you will be forced to do things that go against your principles. If you were not in business these occasions would not come up.
So do what they force you to do - there really isn’t any choice, is there? - and put it in your past. Best wishes.
Re: What a dilemma! - Posted by Potash
Posted by Potash on August 01, 2003 at 17:06:28:
Don’t listen to the pansies, tell the lender what they want to hear, be sure to maintain plausible deniability. On a side note, I find it funny when a chronically late tennnat pays early a couple of months in a row, then I get a “verification of rent” form in the mail.
Re: What a dilemma! - Posted by Todd B (Va)
Posted by Todd B (Va) on August 01, 2003 at 16:15:06:
I assume that you got some option money from these people, or at least one months security check. I would modify your original argeement with them so that the first months rent was paid in advance out of these funds. Therefore 2 months rent were paid on time, and all the rest of the payments were paid 1 month ahead of time.
The other option, depending on when they were late, is to say it was a quarterly lease. Before I came into some money a few year ago, I got 3 months behind on my rent, and then caught it up, at semi-regular intervals. I claimed( and my landlord went along with it, bless him) that is was a quarterly lease. The lender bought it, and I was able to buy a house with only 5% down.
If you charged them a late fee on the months they were late, I would say this higher amount was the rent. The months without they late fee were “discounted” for early payment.
Good Luck,
Todd B(Va)
Re: What a dilemma! - Posted by Todd B (Va)
Posted by Todd B (Va) on August 01, 2003 at 16:13:12:
I assume that you got some option money from these people, or at least one months security check. I would modify your original argeement with them so that the first months rent was paid in advance out of these funds. Therefore 2 months rent were paid on time, and all the rest of the payments were paid 1 month ahead of time.
The other option, depending on when they were late, is to say it was a quarterly lease. Before I came into some money a few year ago, I got 3 months behind on my rent, and then caught it up, at semi-regular intervals. I claimed( and my landlord went along with it, bless him) that is was a quarterly lease. The lender bought it, and I was able to buy a house with only 5% down.
If you charged them a late fee on the months they were late, I would say this higher amount was the rent. The months without they late fee were “discounted” for early payment.
Good Luck,
Todd B(Va)
Re: What a dilemma! - Posted by ron
Posted by ron on August 01, 2003 at 14:08:01:
Joe,
In my business I try to remind myself often that my children are watching every move that I make(sometimes I forget and want to do dirt). So if I were in your shoes I would tell myself, “Self would I want to teach my children to tell a little white lie even though it may be harmless.” For me the answer is no I would not teach them to do that.
God bless you and your family
Re: What a dilemma! - Posted by willie
Posted by willie on August 01, 2003 at 13:54:37:
Were any of the payment actually OVER 30 days late? If they were did he pay a late fee? Were they all paid satisfactorily to you? If they were not actually over 30 days late (when does your lease say it is late?)count from there and you can answer. If they were, see if they will take a letter saying all payments were made satisfactorily.
Re: What a dilemma! - Posted by HawHay Rodriquez
Posted by HawHay Rodriquez on August 01, 2003 at 10:00:44:
Joe, Joe, Joe,
It’s wrong to lie, but if you are dealing with a Fannie Mae or a Freddie Mac loan, it wouldn’t bother me one bit to tell them whatever I had to in order to get the loan. These theaves are raking you over the coals so they can give interest-free loans to every illegal hispanic and Section 8 qualifying reciepient in New York City.
I’d tell them anything they wanted to hear. It’s your tax money you’re talking about with these folks, so it might as well go to you than some non-citizen scammer!
HawHay
Write the letter? Be Honest - Posted by Randy
Posted by Randy on August 01, 2003 at 09:19:51:
If the lender won?t accept the deal - I might know one that will.
If you make false statements to the lender your family will have more problems than the lack of shoes and twinkies.
Re: What a dilemma! - Posted by Bob-Fl
Posted by Bob-Fl on August 01, 2003 at 07:37:27:
If you write a letter stating no late payments, I would suggest you be prepared to document those claims. Many lenders require documentation for almost everything. I just went through this process with a property I helped my buyer get financed. He was on a lease option for 10 months and the lender wanted copies of checks that I recieved from my TB for the payments he made to me. Any underwriter for a mortgage company knows that you as seller can write a letter saying anything you want. Your claims mean nothing to the lender unless you can verify what you are saying.
So… if you want to get yourself into a compromised position of not being able to support your claims, I would suggest you refrain from “small while lies.” Everyone knows it will require more lies to cover up the previous lies. For me that is no way to have to live. And I also know what it is to need money to pay bills.
Just my view.
Bob
Re: What a dilemma! - Posted by ken in sc
Posted by ken in sc on August 01, 2003 at 07:21:23:
Take back a 2nd mortgage. Tell the broker you are willing to do this. This way you can be honest and stil get some money. You might get 30K cash and a 30K 2nd mortgage where the buyer still owes you payments. The 2nd would be risky in that if they don’t pay you probably will not foreclose, but at least you get the 30K and can eat - and sleep at night knowing you did nothing wrong.
Ken
Re: What a dilemma! - Posted by Shawn J. Dostie
Posted by Shawn J. Dostie on August 01, 2003 at 05:56:11:
Since you are having an ethics problem, which is great to see, unlike some of the characters that post here,have you considered taking back your own mortgage, and then turning around and selling it for a discounted sum? You might not get 60,000.00 but you’ll get enought to keep afloat hopefully.
Good Luck,
Shawn(OH)
Re: What a dilemma! - Posted by Matt (MPD) IL
Posted by Matt (MPD) IL on July 31, 2003 at 23:08:36:
Joe,
Did your TB’s pay their rent a month behind? For example, say rent is due on August 1st, did your tenant NOT pay until Sept 1st or later for August or was the payment received within the month of August (even if it was on the last day of the month.)
Just curious. Seeing that a payment isn’t 30 days late until it remains unpaid for 30 days past the due date. If your tenants paid within the 30 days (and my contracts say rent isn’t considered late until the 5th by the way), then it’s possible for you to write this letter, get your money and still sleep good at night knowing you didn’t lie.
If on the other hand, your tenant paid at least 30 days past the due date (if not longer) then yes, your dilemma is still there.
Just my .02.
Matt
Re: What a dilemma! - Posted by John (LV)
Posted by John (LV) on July 31, 2003 at 22:25:31:
Hi Joe,
THIS IS A DILEMMA.
Ethics or food.
Kristine, I think gives the best answer to find another lender who won?t ask the questions, and as long as they aren?t asked, then you don?t have to answer.
This is the infamous: Don?t Ask? Don?t Tell policy.
I wish I could advise you as to which priority is more important as I understand your situation. The only other thing I can add to this dilemma is that no matter what YOUR decision is, it not only affects you and your family, but also your T/Br.
This is a tough one.
Best of luck
John (LV)
Re: What a dilemma! - Posted by Joe
Posted by Joe on July 31, 2003 at 21:35:55:
The broker doesn’t know about the lates.
I doubt if there’s a lender on the planet that will lend if there are 2x30 lates, with a FICO of 540, and less than 10% down.
So it’s probably fib or go under.
Re: What a dilemma! - Posted by Kristine-CA
Posted by Kristine-CA on July 31, 2003 at 20:36:22:
I think your broker needs to find your buyers a lender that won’t require you , or anyone else, to lie. That’s his job–to look at what the buyers have to work with and work with it. Not to lie about it.
I like the part about the broker saying he “only wants a letter.” Would he write it? Perhaps he would. And maybe this isn’t someone you want to be working with in the future. What if you were loaning the money and you found out later that the payor wasn’t what they and their references said they were?
There has to be a better way. I know very well what it’s like to need the money. I still have debts and the deals NEVER close on time, or even close. But don’t let expediency cloud your thinking here.
Put the broker or a different broker to work getting the buyers financed without fraudulent docs.
Sincerely, Kristine