A Builder's Special Incentive ... Your Opinions Please

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Real Estate Services

Scenario:  A builder actively solicits buyers by agreeing to make their first 12 house payments. The buyers are given a lump sum at closing to use when making the payments.  Like most builders, this one has assembled a team of trusted professionals comprised of a title company, loan officer, and listing broker.

The money is migrated from builder to buyer in a creative way. 

 In one specific example, a commission of 13% was intentionally charged to the builder on the settlement sheet even though the actual commission paid was only 6%.  After closing, the difference between the 2 commission amounts was rebated to the buyer by the real estate broker.

 Selling price of property:    $250,000
Commission @ 6%:             $15,000
Commission @ 13%:           $32, 500

Buyer's payment:                $1,498.88/monthly
Buyer's payment:                $17,986.56/annually

Bottom line:                        $17,500 rebated to buyer

This is an actual scenario shared with me recently.


Question: Is the above scenario an example of mortgage fraud if the 13% commission is represented on the settlement sheet?

 

Click here to view my response.


 

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Rainer
26,036
Stephen Graham
Inactive

You're welcome, ED.

June 16, 2007 09:24 AM
Rainer
234,138
Susie Roscoe
Real Estate Specialist | Brandon, FL
Signature Realty Associates

I have to say that anything that is not clearly stated on the HUD is indeed fraud...now I'm heading to YOUR NEWEST BLOG to read what you think!!

June 17, 2007 05:53 AM
Rainer
98,273
Ed Rybczynski

Susie

Good pick up.  Anything that's intentionally concealed from the lender on the settlement sheet is fraud. 

June 17, 2007 06:26 AM
Rainmaker
444,421
Chris Griffith
Bonita Springs Fl Real Estate
Downing-Frye Realty, Bonita Springs, FL
I just had a person contact me to list a townhome they are buying, it is under construction.  The developer is offering them a check for $8K at closing to keep them in contract, not on the settlement statement.  I am not party to this transaction, by the way.
June 17, 2007 06:27 AM
Rainer
98,273
Ed Rybczynski

Chris

Thanks for telling me about this.  Have a wonderful day with your family.   

June 17, 2007 06:35 AM
Anonymous
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Rainer
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Ed Rybczynski

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