Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Do you really need to say more than "but I don't think our lender would approve of such a transaction". If you really believe that then do you have much doubt you are doing something wrong?
I have been in similar situations and it is no picnic. The issues of "fraud" is not the key point to my way of looking at this, it is the feeling of the paper pushers that something could go horribly wrong. The problem cited by MrRational is what everyone ought to fear. Let's say you get Ace Number One Iron and Steel and they come out and properly shore-up the house temporarily while the permanent beams are welded up or what have you. Then while the temporary shoring is in place you have some Thousand Year Flood hit the area and the whole damned house washes away. You try to make a claim and the insurance adjuster comes out and sees the rigging from the temporary shoring. They say "we can't pay for work unrelated to the disaster claim". The lender finds out the collateral for your loan is now a worthless pile of construction debris. You have nowhere to live and no hope of ever paying off the mortgage... NOT GOOD!
Now granted these are EXTREMELY REMOTE possibilities but it is exactly this kind of stuff that makes lenders nervous about "credit for repairs" that are more than a paltry amount of the overall purchase price. These kinds of things are often why homes with known structural issues are often listed "AS IS CASH ONLY". This works out great for the rare cash buyer that can afford to fix a place up. Other folks generally stay far away.
Since it seems like the SELLER is OK and the OP (buyer) is actually the rare professional architect that has the skills needed to oversee / understand these kind of issues the odds of true "fraud" (where the buyer takes the seller's dough and instead of using to improve / preserve the home decides to buy a jet ski and take their chances they their place won't fall down) I would have NO PROBLEM having everything done as outlined. The "paper pushers" at the lender and title company kinda need to just be out of the loop... The HUD form is not some kind of magical document burned into stone by God's Own Hand. It is our meddling gubamint's way of trying to protect idiots from fleecing one another and then come crying to Uncle Same to bail them out. Trust me the US Attorney will never have a manhunt to find some decent architect that used the cash the seller received from the lender to fix up a home. I would certainly recommend AGAINST quickly flipping this home with borrowed funds and heaven help the borrower if they should default on this thing with the current lender, but fraud, as in trying to get something over for financial gain? PFFFFFTTTT!
So if you can advise the OP that they won't lose their job or go bankrupt before the repairs get done, and that this is a low risk situation to take $30k for structural repairs, by all means do so. The fact is that it violates RESPA. I'm not going to encourage someone to break federal law because you don't like the laws. If you don't like RESPA, write to your congressman, start a petition or something.
...Trust me the US Attorney will never have a manhunt to find some decent architect that used the cash the seller received from the lender to fix up a home. I would certainly recommend AGAINST quickly flipping this home with borrowed funds and heaven help the borrower if they should default on this thing with the current lender, but fraud, as in trying to get something over for financial gain? PFFFFFTTTT!
OK, but you don't dispute that legally, not disclosing the cash back is fraud? Whether the OP wants to risk getting caught or not is their choice.
I take it the the structural issue is something the buyer/ OP is OK with. If they think $30k will cover it and it does not then they are out of luck regardless...
While there used to be lenders that would underwrite loans for these kinds of situations outside of the Federal 203(k) system they have all but dried up and having dealt with them before as well I think they are really more trouble / something to fear. They are often associated with the construction firms and they charge MUCH higher fees / rates than any other source of funds.
Frankly if I could "restructure" all the dumb things that the Feds have in place around loans for homes that need repairs that would help more buyers than any record keeping.
I almost hesitate to suggest checking out a lender with experience in the 203(k) loans because in situations where the borrower is a contractor / architect the problems this causes can be WORSE then when a third party is engaged but it might the safest way to get all ones ducks in a row from a legal standpoint.
I sorta agree that the attorney has more to lose by suggesting an end run around federally mandated documentation. That could be a career ender...
I see no problem, but the escrow company should hold the amount of the credit in escrow and pay the contractor from that money according to your instructions. Most of them don't like to do it, but I've had them do it for one of my buyers before.
I see no problem, but the escrow company should hold the amount of the credit in escrow and pay the contractor from that money according to your instructions. Most of them don't like to do it, but I've had them do it for one of my buyers before.
The problem with this er, rational approach (I suspect) is that the sellers don't have $30,000 cash sitting around and won't have it until after the sale using the buyers proceeds.
At this point, unless the lender is insisting on the extra step, there is no advantage to the buyer by having an extra set of hands in the mix and there is really nothing short of Court action to get any more out of the seller if (when?) more/other problems come to light.
The buyer gets one $30,000 bite at the apple.
I hope it'll be enough.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
