Is it illegal for a realtor to help with down payments on a house?

Question

I am trying to close on a house that had many issues on the loan. I've even got to the end, and the bank saw a judgement on my credit that the underwriter didnt catch. 2 mos later, my credit has dropped and the bank wants to lend me 95% instead of 100%. I dont have the money to put down, and my realtor is unable to help me with 900.00. The builder and lender are both pitching in,and the lender said he has a friend that is willing to put his name on my loan and will help me, but he dont want to cause bad relationship with my realtor. The full amount I need to come up with is 1900.00. Is it unethical or illegal to do this, and should I feel bad about changing realtors. He is someone I have been aquainted with for years, and I dont want to hurt him. He didnt help me find the house, or anything, but he has been consulting me on this house since I put my ernest money down in July. Im so confused. What is the best/right thing to do? I have to look out for my family and their best intrest too

Answer 1

Go back to the lender and get a second mortgage for the shortage. You close back to back on the notes, and you are done. If the "bad debt" is an issue get enough to pay it off. If a FHA loan you can borrow against your car or boat, etc. they're yours and you are simply pulling out equity.Alternately if the seller, lender and you will agree, and if the appraisal would stand it you could raise the home sale price a bit to cover the deficiency or pay off the outstanding debt.

There probably is not much in the deal for the real estate agent, new construction usually carries a lower commission because the seller pays some closing costs. I doubt the "friend" of the lender is willing to co-sign because of the agent, rather truthfully it is your credit rating. It is risky for a lender to give you the loan, a co-signer is responsible if you fail to make those payments. I would not co-sign for you.

Changing agents will not solve your problem. You created your credit issues with the choices you made. Maintaining good credit is also a part of taking care of your family. Perhaps this home is not in your family's best interest. Perhaps a lower priced home is. Buying at 100% financed is, in my opinion and my experience never in your best interest. You have a problem if you have to sell it in a year or 2 and have no equity to pay the sales expenses, and no money saved to pay them out of pocket. I think it would be smarter for you to save some funds, pay the bad debt and work a bit more on the credit rating. Learn to save and pay on time, not to take on more than you can afford; that means not having your paycheck spent before you earn it. Plan a budget and stick to it, take credit management classes and learn to prioritize.

Chose wisely. And good luck.

Answer 2

Yes; this depends on the loan and not only can the realtor be in trouble but you can get in trouble as well. Some loan companies have been involved in fraud and some loan officers will make serious mistakes to make a loan. This is a serious offense in some states. Make sure their are no hidden cost that are not disclosed in the real estate transaction or the loan. Consult an attorney if you feel you will be paticipating in something illegal. If the loan is a bad one; everyone involved could be in trouble.

After thinking about this question what I would do is use my original realtor and come up with the 900.00 on my own. I would do everything possible to make sure everything was done legal. Maybe you could have a yard sale, sell a boat, a car, something of value that you have or get a gift letter from a relative.

Answer 3

Be careful!!!!!!!!!
A friend that is willing to put his name on your loan is highly suspicious. Also, why would that cause trouble with your realtor or cause you to change realtors. If you trust your current realtor, there should be no reason that you have to ditch him just to get some more money. This is very fishy.
Try to find a different lender that can give you advice. The services of a loan officer or loan consultant are free. Tell them what the situation is, and what your credit score is and do not let them pull credit yet. See if they can get you a similiar loan without all the hoopla before you decide if you want to change lenders.
This is very tricky to help with because there is a lot of underlying information that is determining your course of action. It may be possible to get advice from a lot of different sources, but do not trust them all. Good luck.

Answer 4

It means, he wants you to help him commit fraud. See, it doesn't matter what you WANT to pay for the mortgage. The taxes and insurance are competely out of your control, EVEN IF you take a 30 year fixed mortgage. But these slimebags are probably going to try to sell you an adjustible rate mortgage, and in a couple years, it will go through the roof. Meanwhile, your property taxes will go up (because it's based on the sale price), too. Most importantly, the commission to the agent and mortgage guy will be more, on the higher amount, and once the deal is done, they're outta here. If you have no down payment, you can't afford to buy a house. Period. Keep renting. The scenario you're outlining, is EXACTLY what caused the "mortgage crisis". If you go along with this, what's going to happen is that they'll make money, you'll end up with a house you can't afford, which will be reposessed within five years, and then you'll have a bankruptcy on your record. Don't screw yourself this way.

Answer 5

If the 5% must come from you(and not be gifts) then no third party can contribute that amount. It would be fraud if they did.

You might seriously consider walking away from the deal even if your lose your earnest money. It looks like you are stretching yourself dangerously thin.

Putting someone else on the loan sounds like a very bad idea.

Answer 6

It is not illegal to accept gifts. It is fraud and may be criminally illegal to conceal hidden financing in a real estate transaction.

** Note: This is a general discussion of the subject matter of your question and not legal advice. Local laws or your particular situation may change the general rules. For a specific answer to your question you should consult legal counsel with whom you can discuss all the facts of your case. **

Answer 7

While there any many issues of legality and ethics involving brokers, there is no reason a broker wouldn't be able to assist you with the down payment. In fact, anyone including the seller could assist you with the downstroke, if they were so inclined. I am somewhat unclear as to how many different brokers you are currently working with. You might want to make sure you didn't sign an exclusive buyers contract with any of the brokers.

Answer 8

I not sure I understand what you are saying. You can not afford to buy the house and there is some people willing to help you? If, you feel it is not right, then do not accept their help and keep renting for the rest of your life, or, until your can repair your Credit.

Answer 9

nope...i dont think this is illegal. it is a touchy situation for obvious reasons, but legally, you nor they can get in trouble. make sure clear contracts are drawn up if you do this.

also, you can ask for a seller second. this is basically the same thing except that the seller is helping you out, not the realtor.

Answer 10

Conflict of Interest!!!!!

YES!