Residential Real Estate
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Cash Back at Closing Q&A
the details of the transaction are fully disclosed to the lender prior to closing? Answer: This is a trick question. Most of the people who ask this question are actually not fully disclosing the details of the transaction to the lender. If they were, the lender would never approve the loan. What happens in many cases is that the con artists create two HUD-1 statements: one that discloses everything at closing and another, sent to the lender, that withholds important details. By including the details on one of the HUD-1 statements, the con artist convinces everyone that the details have been fully disclosed when they have not been. In other cases, the HUD-1 may contain all of the details but someone pushes the loan through the approval process. Prior to the current mortgage meltdown, many lenders were so eager to have loans approved that they lowered their standards. Even though all the details of the transaction were disclosed at closing, the outcome was still the same: Lenders approved loans that should have been rejected outright. Some say that this is the lender"s problem, but we all pay the price. Question: What if the seller agrees to accept less for the property at the very last minute? Answer: Buyers will often sign a purchase agreement conditional upon the home passing inspection and then negotiate for a seller credit just prior to closing. They may ask for additional repairs, claim that their finances have changed, or provide some other explanation for why they need a credit in order to close. The sellers may be so tired of the process at this point that they agree just so the deal will close. When situations such as this arise and the buyer and seller agree on a lower sales price, then the paperwork needs to be amended, the lender needs to be informed, and the loan documents and approval must be reworked. If the concession is not disclosed to the lender, then there is an issue. Buyers and sellers can negotiate whatever they want, but everyone involved in the transaction must be informed. An agreement on an addendum is not sufficient to complete the transaction.Pages: 1 [2]