Apparently, any of us who are having a side swipe (or head on) with the real estate business at this moment in time are not already suffering enough. Effective 6/1 Fannie May and Freddie Mercury have updated the underwriting engine for loan applications. In english this means changing the requrements for getting a loan.
The result seems to be an increasing denial rates on loan applications by 20%. Additionally if the application was not submitted for underwriting prior to 6/1 there will not be a 100% financing option. What does this mean? If you have not applied with a lender and had your credit pulled and underwriting findings pulled, you're starting over. From Monday 6/2 on it's a new day in the approval process.
Go Directly to Jail.Here's the question of the week:
Q: I have a property that is worth $500,000 that I am selling for $300,000. I know it is worth $500,000 because I had it appraised recently at that value. A buyer wants to pay me $400,000 and then have me give him $100,000 back after the closing. Is this legal?
Dear 'Frustrated':
If your property is truly worth $500,000, you should get paid that amount and any contract to sell the property should accurately reflect what you are getting paid for it. If your "appraisal" is accurate, you should be receiving that amount in the fair market. In the end, you know what they say. Appraisals are like......well never mind.
To answer your question, giving $100,000 to your buyer after the closing may be illegal on many fronts. If your buyer is obtaining a loan to buy the property, you may be participating in a fraud against the lender by structuring the transaction to deceive the lender into believing that the buyer is putting money down for the purchase when the buyer is actually getting money back after the closing.
It may also be illegal under the laws of our state and under your local municipal codes that require you to accurately reflect the sales price for any property sold by you. Please consider a trade with a preforeclosure in Mars Hill before consumating this transaction or at the very least GET AN ATTORNEY.Give Me An F!
Foreclosures continue to rise nationally, blowing the lid off in the 1st quarter of 2008 compared to the 4th quarter of 2007. Locally it's trending the wrong way as well. In 2007 23.7% of all sales were bank owned. In the first five months of 2008, nearly 29% of all sales were bank owned. Want to be thoroughly depressed? Go take a look at how many foreclosures are in your own zip code at RealtyTrac. It's another important factor in further slowing the absorption of inventory in the current market which is a must before any recovery in the housing market can occur.
