Were "kick backs" commonplace as anecdotes make th 8 posts by 6 users

Posted: 04/26/2008 at 12:05PM

I don't know how it was done but I know it was fairly common in our market. I talked to one homeowner that got $30k cash at closing that was supposed to help supplement payments--this is in addition to 100% financing and all closing costs rolled into the loan. Again, I don't know how it was done because his lender probably won't have allowed it.

I have tracked a number of foreclosed homes that were " double ended" by the real estate agent and sold for 10% more than the list price after being on the market for 100 or more days. When you look at the sold price there was no way the house should have appraised for that amount. Obviously fishy.

I don't think there has been much investigation because the banks are so overwhelmed trying to deal with the foreclosures that investigating somebody who got $20-50K under the table is small potatoes and not worth the time.

Posted: 05/15/2008 at 08:11PM

Really people who deal in these deals just take the cash under the table and let it the property go. I could say that they really do it for no other purpose other than money, and a ruin credit for rest of thier life. I mean some that actually care to buy real estate, and keep it an on going project knows what holding on to real estate means. These things have to be first toughen out the first few years, and that appreaciation will come in a 5 year span. I check the wave of real estate cycles back when Warren Buffet said people need to buy homes back in 2001. Low interest rates back than spur real estate to an end with a subprime story for the climax top. 1990 & 2000 & 2010
crash, buy, buy, is the market like the 1990 crash no way man.........................................its about the same.

Posted: 05/16/2008 at 06:05PM

Not many people would deliberately sabotage their good credit for some quick cash ( except for the substance abusers and identity thieves)
.
Here's how that game typically went The " Investor" who had a 680 or better credit score qualified for 100% financing Stated income/ Stated Assets or No Ratio and for a brief time No DOC ( No verfication of income occurred with any of these programs. The rub was the borrower pretended to be purchasing a home to live in and actually had no intention of living in the home. A prospective Lease-to Purchase was lined up to occupy the home and cover the mortgage payments in many variations of this scheme a portion of the kick back money was supposed to " protect the Investor" some of the bolder operators actually marketed this a a second chance opportunity for the cash rich and credit poor (People with income that was " difficult" to document) The rapidly appreciating markets allowed for substantial " equity spreads" the source of the " kick back money." i.e the FMV is 100K the seller has 45K into the property and would be happy with netting 18K profit, the change goes to paying all the closing costs and a gratuity to the buyer. What makes it FRAUD is the unwitting lender thinks it's making a homeowner a no money down loan, the fact that the borrower is receving a substantial rebate is not disclosed. Everyone who is a party to the non-disclosure is a party to the fraud. It couldn't have been on the settlement statement because 30K back to the buyer on anything other than a purchase/rehab loan is a price reduction which woud require a return to an underwriter and without a doubt that loan amount would be substantially reduced to remove that " kick Back" . The foreclosures occurred when the buyer ran off with the money or the " tenant" couldn't pay the mortgage and so on
_sidebar_

I'm personally a bit tired of the revisionist history often spouted by denizens of forums like these. I and many others REFUSED to do deals like these, spent many hours explaining, warning, reporting but they kept closing, heard many a " Guru" brag on how many they had done in many a prestegious investment group meeting.

The most reliable measure of Fair Market Value is.... What someone else ACTUALLY PAID for a property with similar features.

Often Legitimate situations such as Rehabs, estate sales, forced sales ( Divorce, relocations etc) get lumped in with some of the fraud that occurred. Ok I'm off my soapbox

Posted: 06/26/2008 at 06:25AM

Here's how that game typically went. The " Investor" who had a 680 or better credit score qualified for 100% financing Stated income/ Stated Assets or No Ratio and for a brief time No DOC (No verfication of income occurred with any of these programs.

Verification of employment (but not income) occurs verbally by calling the applicant's place of employment to determine if he or she works there. Also, written verification of income was often required. For a self-employed person, a letter from a licensed Certified Public Accountant was required. In addition, stated income loans were put through a matrix (such as Core Logic) to determine if the income stated comported with income reported for the same or similar job in the applicant's community.