Actually this has been happening more and fraud has been committed in many of the cases as it is not shown on the HUD.
REMEMBER the first lender dictates the total amount that the 2nd can receive.........Now if all is amicable and it is presented as such on the HUD , no issue from what I understand. Buyer would obviously need to agree and should be told this upfront at time of offer submittal that they may need to contribute.
However if the first dictates total amount 2nd can receive is $10,400 and the 2nd comes back and states they want $15000 and tells you to write out a check after the fact for the difference and the buyer pays the difference or whomever does not really matter, they are asking you to commit fraud... The very thing that has caused so many issues in the past with monies passed after the fact.
If it is a known up front, part of the HUD statement, then from what I can muster is ok. From what I have seen and been told though, these requests are NOT on the HUD statement and the First lender is unaware that the buyer is paying money to the 2nd after the fact. Therein lies a major problem........
Fiinally closed on a short sale after nearly 7 months of going back and forth between the two lenders.
Got buyer to come back, but buyer offered less. Comps show market values dropped. And, we were able to provide inspection reports that show about $30K worth of work
Final outcome: 2nd lien holder wanter $13K. 1st will only pay $6K. Buyer agreed to contribute towards the difference.
We were short on closing costs. Buyer agreed to also pay for the difference. All buyer contributions spelled out on the HUD. Both lenders gave final approval to this arrangement. And we finally closed escrow!
If the amount that the second mortgage holder is not disclosed on the HUD than that buyer cannot contribute anything outside of closing to the 2nd lien holder it is fraud. If your first mortgage is a fannie mae loan they dictate what the 2nd mortgage holder is allowed to recieve. Pull the mortgage and see what kind of loan it is or call the first mortgage holder and tell them to send to you there rules regarding funds outside of closing and show that to the 2nd lien holder. Or ask them if they would like you to call the attorney generals office in your state to let them know what they are trying to pull. That should stop them in there tracks....Go as far up the ladder at the bank as you can get before you tell them that you are going to call the attorney generals office.