Real Estate Forums

HomeChoice.com · 11-06-2007, 06:40 AM

Quote:

Originally Posted by HomeSurfer.com

Incentives are great. Most and many are good. "Cash back"...? I assume you're talking about rebating money directly back to the buyer rather than applying it to closing costs or things "allowable" by the lender and their underwriting guidelines.

Do you disclose said "cash back" in the sales contract? Or is it a separate agreement? Do you inform the lender of the "cash back"...?

If not, you're engaging in fraud.

We put it on the purchase agreement so that everyone can be aware of the "Cash Back" at time of offer. It is stated as "Selling Agent to credit Buyer up to 1% of the Commission after closing" This lets the financial companies know that the money will be passed to the buyer after closing therefore the client needs to secure full funds based on the their merits not the Cash Back. On our Web page we have a link to the new Goverment endorsement page for Cash Back.

HomeChoice.com · 11-06-2007, 08:57 AM

Fraud to a mortgage company involving an agent is when funds are provided to the borrower (from a agent) prior to closing where the borrower claims to the financial company that the funds are indeed his/her own. Most mortgage companies protect themselves against such actions by asking for 2-3 month bank statements - seasoned funds. In the past 7 years a lot of banks (most gone) jumped into the lending market and cut underwriting corners and I have read where these actions did exist. In all the cases I read the mortgage lender went after the consumer or mortgage broker (most of the time enacting the acceleration clause). I have not yet seen any court cases that had a real estate broker responsible for a loan based on any cash back properly disclose or not. But I always disclose upfront on every transaction on the purchase agreement so that everyone is aware of my future actions.

HHI Golf Guy · 11-06-2007, 09:25 AM

It seems to me that one of the best buyer demographics to target right now would be people that rent apartments of live in corporate housing. After all, they can get a great deal on a new home and don't have to worry about selling an existing home.

With that being said, an incentive that might appeal to them would be paying / rebating any fees incurred for early lease termination.

HomeSurfer.com · 11-06-2007, 05:01 PM

Quote:

Originally Posted by HomeChoice.com

We put it on the purchase agreement so that everyone can be aware of the "Cash Back" at time of offer. It is stated as "Selling Agent to credit Buyer up to 1% of the Commission after closing" This lets the financial companies know that the money will be passed to the buyer after closing therefore the client needs to secure full funds based on the their merits not the Cash Back. On our Web page we have a link to the new Goverment endorsement page for Cash Back.

As long as the "cash back" provision is in the body of the purchase agreement, that is fine. That way the lender can ascertain whether it fits into the underwriting guidelines used to approve the loan. That is not fraud.

Not everyone does it right, the way you are doing it -- that's why I introduced the topic to the thread.

HomeSurfer.com · 11-06-2007, 05:07 PM

Quote:

Originally Posted by HHI Golf Guy

It seems to me that one of the best buyer demographics to target right now would be people that rent apartments of live in corporate housing. After all, they can get a great deal on a new home and don't have to worry about selling an existing home. With that being said, an incentive that might appeal to them would be paying / rebating any fees incurred for early lease termination.

Downturns of the market are one of the best times to deal with builders. Not only are they more willing to pay commissions, but they offer incentive money up the ying-yang, depending on the price of the house. California during the early nineties was a fun time to deal with builders.

One of my favorites was when FHA used to allow "temporary interest subsidies." This is different from a buydown. You could take the builder's incentive money and apply it directly to the interest portion of the mortgage payment every month until you used it all up. This meant that the buyer/borrower only had to pay the principal portion of the payment during the subsidy run (plus taxes and insurance), but not the interest. Since I was about the only lender in Southern California who knew about this option back in the early nineties, it was a great way for me to pick up new builder accounts.

Alas, I don't think FHA allows temporary interest subsidies anymore.