Give me a quick read on seller's settlement workaround

[Robert Haworth]

BP Nation:

Am in need of a quick read on this unusual situation with a distressed investor/seller unloading several properties. We are trying to buy just one. My agent is asking her broker as well as a settlement officer about this workaround. Want to make sure that this doesn't place anyone in the transaction in jeopardy.

Our agent came back with this:

Listing agent called me back and here is what they are offering. They will accept you offer and remove the sellers assist. They are asking that the charges of 1% transfer tax on their side as well as commissions show on paper that you paid those and in reality they will give you a check for those fees before settlement to hand over to title company. They can not show that they are paying because of other properties being held by bank.

The HUD-1 will look like you are paying an additional $7000 but seller will give you a certified check for this amount to cover those fees prior to settlement made out to the title co.

[Jon Holdman]

Are you getting a loan or is this a cash purchase? If you're getting a loan you're about to commit loan fraud because money is changing hands between buyer and seller that doesn't show up on HUD-1.