Housing Giants - November 24, 2008 - (Page 24)

f e at u r e Red flAGS Of A bUIldeR mORTGAGe ScHeme The following fraud triggers may suggest a builder scheme: n The builder is desperate to sell the property. The borrower is barely qualified or unqualified. The sales price and appraisal show signs of inflation. No-money-down sales are heavily promoted. “Silent” second mortgages are involved. The source of funds is questionable. Incentives such as buy-down funds appear excessive. The source of secondary financing on the HUD-1 or purchase contract is unclear or indeterminable. Parties to the transaction are affiliated, or the transaction does not appear to be an arms-length transaction. Indications are of straw buyer activities. n n n n n n n n n Source: Freddie Mac media room is finished-out top-notch — if you are getting something in that purchase price that isn’t real-estate — that constitutes fraud,” he says. However, if the items are reported separately in an addendum, valued and taxed and noted not to be part of the sales price, then you should be safe from fraud. “Almost every top builder in this market area in north Texas were participating because they found a legal loop hole,” Nichols says in regard to down payment assistance programs via companies such as the Nehemiah Program. Through Nehemiah or Ameridream and other such services, a seller could donate the amount of assistance it wanted to give the buyer, and the buyer in turn would receive a grant in that amount to use toward the down payment or for paying off other debt. The passage of H.R. 3221, The Housing and Economic Recovery Act of 2008, put a ban on the down payment assistance programs for FHA-backed loans initiated after Oct. 1, 2008. The ban became law when President Bush signed H.R. 3221 on July 30. “It was fraud if the info was hidden,” says Nichols, “if they are not disclosing it to the appraiser or the appraiser is not disclosing it to the lender.” “One house that sold three times included a car in the mortgage. It becomes almost like racketeering 24 HOUSING GIANTS.11.24.08 www.HOUSINGGIANTS.cOm http://www.getdownpayment.com/ http://www.getdownpayment.com/ http://www.ameridream.org http://banking.senate.gov/public/_files/HousingandEconomicRecoveryActSummary.pdf http://banking.senate.gov/public/_files/HousingandEconomicRecoveryActSummary.pdf http://www.housinggiants.com

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Housing Giants - November 24, 2008

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