This isn't necessarily a short sale question. However, I see a very suspect line item on my seller's HUD1.

It's a "Lender Promotional Credit" and when financing fees are added up with this credit, it conveniently equals EXACTLY our maximum concession of 3%

Looks very suspect as though the lender is crediting the buyer back the remaining balance on the concession.

Conveniently nobody is terribly excited to explain the fee to me. Anybody had experience with this before?

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I assume you mean it's a credit from the Buyer's lender, on the buyer side. Used to be called the Yield Spread Premium, a rebate given to the buyer for accepting a slightly higher interest rate....1/8 to 1/4% higher rate equals a 1-2% credit. Has nothing to do with the seller or shorted lender.

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