seller wants $3000 cash to close .. isnt this illegal?

okay we are now 2 weeks from closing but the problems continue.

Seller is expecting to receive $3000 moving money even though they did not qualify for the HAFA program.  They were emailed about this months ago by the negotiator (i was copied on it).  They are stating they will not close without it.

isnt it illegal for me (the buyer) or the broker to agree to give them cash to close the deal?

what say you???

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Then you tell them that they cannot receive any funds from the short sale and quote them the law, plus you quote them the law that you can't give them a credit, and then you tell them that they still owe you a commission.

cathy: i'm not sure that i explained myself correctly. i'm the buyer and the seller is threatening not to close if they don't receive the $3000 dollars from somebody.. anybody.. whether its the broker, me the buyer or the bank. 

it is illegal to give them any money right? i think my realtor was trying to encourage me to do some under the table money exchange...  is this a standard practice?  

I'm sorry, I didn't read it correctly. Still, the buyer can't receive any cash at closing in a non-HAFA sale. And if any REALTOR is trying to do something in an "under the table money exchange", in other words, "off-HUD", they don't deserve to be called a REALTOR. The seller's agent should explain to them that there is no "the $3000".

Go to closing and if they don't show, then you're entitled to walk away.

Cathy, that is not necessarily correct, there are lenders who will pay the seller an incentive on non HAFA deals.  Never say can't or won't.   

Jeff, did you see where he said that his "i think my realtor was trying to encourage me to do some under the table money exchange"?

I'm sorry, in this case, I will say never. I will never to anything "off-HUD" OR "under the table".

Yes, I know that Citi and others are offering huge incentives. But that's not what this question was about.

I saw what he said and I also saw your statement that said sellers can not get any money if it is non HAFA which is not true.  I would not do anything off the HUD either.  

 

To the best of my knowledge if it is disclosed to the short sale lender and they are willing to sign off on allowing cash to the seller it is not illegal. The question is will the shorted lender agree to having the buyer, agents or both contribute to the moving expenses of the seller?

ah, seller extortion. what an appropriate title. however, i will reserve judgement on them since i do not know how their realtor explained it to them.  he has a bad history with me on this deal so i'm wondering where the miscommunication came in.

the problem is i've been trying to buy this house now for what , 8 months? we are finally at the finish line and it seems like a new problem pops up every day. sigh.

It's not illegal unless the lender specifically prohibits it and the parties sign an affidavit stating they aren't receiving any funds.

Cathy. What law are you referring too? I'm not aware of any laws that would prohibit this. It's a lender/investor guideline not a law. The law would be agreeing to not do it and then doing it any way. That would be considered fraud.

Arod. What you need to do is look at the short sale affidavit and see what it is you have to agree to . If it doesn't mention anything about the seller not receiving finds then you CAN give the seller funds. It would need to be on the closing statement unless you are paying cash. If a cash purchase RESPA does not apply and you can pay the money however you want. Including "under the table". The key is the affidavit with the lender.

Maybe the seller has some personal property he can sell you for $3,000? Lawn equipment, furniture, boat, car etc...Anything that's not real estate secured by the mortgage and has a value of $3,000.

But as always be sure to seek legal advice in these matters. I am NOT an attorney and this is just my opinion.

bryant, nice picture, i almost didn't recognize you ;)

okay, what is this short sale affidavit i need to look over? is this the bank approval letter? 

it is NOT a cash closing. there is a lender. 

i'm glad you give me the alternative ideas about purchasing furniture etc. there is a spa that they were trying to sell me.   but as long as you are giving me ideas, wouldnt the broker be able to buy some furniture too??

There you go. Buy the spa for 3k. Or the broker can buy it and give it to as a closing gift.

Who is the lender? Let me know and I'll dig up their affidavit if there is one.

Sounds like the purchase of the spa may be the way to go.

I do look like an attorney though :)

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