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Millionaire Now! by Larry NusbaumThis blog is based on the organizational principles found in my new book, "Millionaire Now! - A Financial Toolbox with Seven Steps to Wealth". |
REAL ESTATE SCAMS UNDER THE RADAR...FOR NOW
Posted on 10/17/2006 16:16 PM | Link | Post Comment
They may be under the radar now, but they will soon be in your newspaper headlines. And, make no mistake about it it's about the money first and last.
1. If a house was built in 1975 and was completely remodeled in 2004 the listing should disclose that and not teh date built as 2004.
Many listing agents are improperly listing the "year built" of houses that have been recently been remodeled in an effort to be included in various searches of fairly new homes. Not only is it a violation of federal law (for not completing the lead paint disclosure for houses built before 1978) but it also violates the commissioner's rules in most states as the incorrect year built. This is a simple one: the foundation and various piping / utility services are from 1975 and not 2004.
2. A seller lists and sells a house for $400,000. It appraises for $400,000 and the loan amount is for $400,000. But, the buyer and seller have a side agreement in which the buyer is credited back (rebate) $40,000 by the seller at the close of escrow.
What is the real price? $400,000 or $360,000? The answer is clearly $360,000!
In this case, the agents may have committed contract fraud. The escrow company may have committed fraud if the rebate is not disclosed on the HUD-1. And, the buyer will have committed bank fraud with his loan application to the lender.
Also read: Guard against mortgage fraud from CNNMoney
It's on the rise, with seniors and first-time home buyers most at risk. Here are the red flags to watch for.
1. If a house was built in 1975 and was completely remodeled in 2004 the listing should disclose that and not teh date built as 2004.
Many listing agents are improperly listing the "year built" of houses that have been recently been remodeled in an effort to be included in various searches of fairly new homes. Not only is it a violation of federal law (for not completing the lead paint disclosure for houses built before 1978) but it also violates the commissioner's rules in most states as the incorrect year built. This is a simple one: the foundation and various piping / utility services are from 1975 and not 2004.
2. A seller lists and sells a house for $400,000. It appraises for $400,000 and the loan amount is for $400,000. But, the buyer and seller have a side agreement in which the buyer is credited back (rebate) $40,000 by the seller at the close of escrow.
What is the real price? $400,000 or $360,000? The answer is clearly $360,000!
In this case, the agents may have committed contract fraud. The escrow company may have committed fraud if the rebate is not disclosed on the HUD-1. And, the buyer will have committed bank fraud with his loan application to the lender.
Also read: Guard against mortgage fraud from CNNMoney
It's on the rise, with seniors and first-time home buyers most at risk. Here are the red flags to watch for.
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