I am doing an ASC 1st and HFC 2nd.  We have the first hud to ASC with a payout of $13,000 which is 10% of the loan and the HUD to HFC with $8,000.

 

A collegue told me on the second HUD I should only send in what HFC will get and not allow them to see what ASC is getting. 

 

Have you done this? 

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Basically you are just using two HUD's to negotiate and they are estimates without knowledge of what either lender will take which we are attempting to find out on the initial submission. I can see how someone can make a case this is fraud but I feel your case might be strong enough to prove otherwise as long as this was done previous to knowing what the bank agreed to. My question really would be if you have two lien holders and send one single HUD to both with the exact same numbers but one of lien holders do not approve the value would that make it fraudulent since the numbers aren't correct to the other? How would we know that? 


I agree there can only be one HUD at closing disclosing all payouts but during negotiations there is no way for us as agents/attorneys/negotiators to know since the lien holders keep all their details private. If they want to try an enforce us to do things a specific way they will need to provide us pertinent facts about the value of the property they have such as what their BPO/Appraisal and what their bottom line is and stick to it with out change. They don't share this with us because they want to negotiate the price and attempt to squeeze more money from all parties. In some cases they counter high just to counter high even when it's not inline with their numbers. So wouldn't that be considered fraud.

 

I think fraud can only be proved when you have knowledge of something and purposely deceive another party to benefit your own interests or in this case your clients. If providing the two HUD's is done without any previous knowledge of what the two lenders will take as a payoff, how could this be considered fraud, we have no knowledge. Now if we knew the 2nd would take $3000 and than submitted to the first for $6000 than I can see someone claiming fraud because we are purposely attempting to deceive another party with knowledge. I believe this would also cover us on ethics as well since we can only act within our knowledge.

 

On another note, the third party lien holders define this as negotiation, hence the term negotiator so in their own language, it's negotiation and they recognize this HUD is not the final approved HUD.

 

Hopefully I didn't miss the point but would love feedback on this. 

 

 

 

"the negotiator" talking about how lenders decieve us is irrelevent... no matter what we don't decieve any party in the transaction whether we have a fiduciary duty or not to them and whether they deserve it or not.

The Negotiator said:

We are deceiving the banks? HA! I'm sure you totally agree and understand the banks not telling us the TRUE BPO value they have on record. The banks lie and deceive us ALL DAY LONG!

but pure and simple: using one hud to represent one specific offer you are making to a single lender and then using a different hud to represent a different offer you are making to a different lender is not fraud or deceptive.  it just isn't. any one who says it is not seeing the picture with clarity.

if you think such is fraud. then you must also think it is fraud when you send one hud to the lender.  the lender counters the amount offered and then you send a new hud. oops... you got to huds... shit... OMG... fraud... fraud... fraud... you have two huds... I think people have an emotional reaction to the phrase "TWO HUDS"...

 

fact is and i think we all agree... ultimately when you have a deal. all parties agree to the same hud... it all closes with full RESPA compliant FBI compliant... all around compliant disclosure to everyone... period... 




Baaaaaad!

Violations all over the place, not to mention bank fraud.

Do it and you could be paying with 5 to 10 in the Pen.

The fact that they are "preliminary" I think is of no significance since the lender is eventually going to "rely" on the preliminary and agree to some form of it.  The problem regarding "it isn't the final" is that the prelim they accept and the final that results must be the same. If you pull a switch, the final could be refused or worse, it get's by and then the lender says "fraud and misrepresentation".  I would never knowingly participate in such a scheme.

I think the 'Negotiator' has a point here. Really what we could use here is a regulation, or law, compelling the note-holders to openly disclose their positions. The home-owner must disclose everything - the banks don't have to disclose anything ... but of an unlevel playing field, eh?

As to fraud, first, there can be no actual fraud until the deal is closed. If you are using two HUD's in two SEPARATE negotiations, and they are combined into one HUD at the closing, which all parties have agreed to, there is no fraud. Nobody is defrauded because they have agreed to the terms.

The argument then becomes one of misrepresentation. Agents have a fiduciary responsibility to their sellers and/or buyers. Not to the banks.The banks have their own lawyers to protect their interests, and to review the contracts, the HUD and everything else. This is not a prescription for deception, but a delineation of legal responsibility.

 

Am I wrong?  If the banks/investor has legal counsel that reviewed the contract and the HUD, and there has been no material misrepresentation of any factors affecting property value, how can there be fraud?  Agents are to be held responsible for multiple investors bickering over how much of an already small pie they are going to get?

 

 

 


The Negotiator said:

We are deceiving the banks? HA! I'm sure you totally agree and understand the banks not telling us the TRUE BPO value they have on record. The banks lie and deceive us ALL DAY LONG!


Hi...

 

I do this ALL the time...I request a much higher amount from the 1st TD towards the lien and liability release of the 2nd TD. What this allows me to do is negotiate both 1st & 2nd TD lenders and try to meet in the middle! The majority of the time I'm able to get a higher contribution amount from the 1st TD towards the 2nd TD and the 2nd TD accepting a lower amount! What do you think happens when I call the 2nd TD back and tell them that I've been able to get them more money than what's been already accepted...? That's right...a deficiency balance/liability release!

 

Short Sale Specialist: Jennifer Escobar | Qwest Real Estate | www.Glendale-ShortSales.com | www.JenniferEscobar.com


Richard and Thom,

Where is the violation?  Are you saying every first HUD you submit is an ACTUAL FINAL HUD?  No one here can give exact numbers intially. We ALL give preliminary HUD's based on ESTIMATES. Water payoff ESTIMATES, Sewar payoff ESTIMATES, closing ESTIMATES, tax ESTIMATES.  I'm ESTIMATING the a payoff to the second lender of $8000 not knowing if they will accept.  I'm ESTIMATING to the first lender that they will allow $13,000 to the second.  My lawyer prepares these HUDS, so if I was doing something illegal, I'm sure I'd know.  Only until we know who will accept what amount for a payoff can we try to prepare a FINAL HUD.  If the first lender OK's $13,000 to the second, and the second lender accepts $8,000 then I call and tell them I can get them more money. 

 

Both HUDS match at closing.  I think everyone is missing my initial question.  Does the second lender have a right to know what the first lender is getting BEFORE the FINAL HUD? 

Smitty,

 

I never said there is a "Violation".

 

Thom Colby



Smitty said:


Richard and Thom,

Where is the violation?  Are you saying every first HUD you submit is an ACTUAL FINAL HUD?  No one here can give exact numbers intially. We ALL give preliminary HUD's based on ESTIMATES. Water payoff ESTIMATES, Sewar payoff ESTIMATES, closing ESTIMATES, tax ESTIMATES.  I'm ESTIMATING the a payoff to the second lender of $8000 not knowing if they will accept.  I'm ESTIMATING to the first lender that they will allow $13,000 to the second.  My lawyer prepares these HUDS, so if I was doing something illegal, I'm sure I'd know.  Only until we know who will accept what amount for a payoff can we try to prepare a FINAL HUD.  If the first lender OK's $13,000 to the second, and the second lender accepts $8,000 then I call and tell them I can get them more money. 

 

Both HUDS match at closing.  I think everyone is missing my initial question.  Does the second lender have a right to know what the first lender is getting BEFORE the FINAL HUD? 

Smitty,

Even if there were no technical violations/laws being broken during negotiations...I guess I just don't see the point in worrying about weather or not the 2nd has the right to see what the 1st is getting (and Visa Versa).  You are going to show them in the end with the final settlement (HUD) you might as well just be up front from the beginning. Then you will not have to worry about weather or not one will reject your final hud after docs are signed and you are ready to close. I just don't see this as a valuable negotiation tactic. Of coarse you have to negotiate between the 1st and 2TD after you hear back from the 1st in regards to what they will allow the 2nd to have. I have never had them both agree at the get go (unless at the same bank/same negotiator). When I have actual #'s I then resubmit a hud to the 2nd  so they know what I am dealing with on an approved price/deal... and fight it out from there:) I just don't see any benefit to it. 



Smitty said:


Richard and Thom,

Where is the violation?  Are you saying every first HUD you submit is an ACTUAL FINAL HUD?  No one here can give exact numbers intially. We ALL give preliminary HUD's based on ESTIMATES. Water payoff ESTIMATES, Sewar payoff ESTIMATES, closing ESTIMATES, tax ESTIMATES.  I'm ESTIMATING the a payoff to the second lender of $8000 not knowing if they will accept.  I'm ESTIMATING to the first lender that they will allow $13,000 to the second.  My lawyer prepares these HUDS, so if I was doing something illegal, I'm sure I'd know.  Only until we know who will accept what amount for a payoff can we try to prepare a FINAL HUD.  If the first lender OK's $13,000 to the second, and the second lender accepts $8,000 then I call and tell them I can get them more money. 

 

Both HUDS match at closing.  I think everyone is missing my initial question.  Does the second lender have a right to know what the first lender is getting BEFORE the FINAL HUD? 

Thom,

 

You wrote "RESPA" in your response.  What RESPA violation is occuring here?

"By providing two different HUDs to two different lenders for the same transaction, you are deceiving both lenders.  Further you are creating a worse situation for both the borrower and you.  What happens when ASC (Wells) comes back to you and says - nope, only $3,000 to the 2nd and HFC comes back and says we want $11,000 at a minumum?"

 

I don't see how I'm creating a WORSE situation.  If Wells is only going to allow $3000, then that's it.  How is that any worse than if both initial HUDS were the same?  I still only alloted $8000 to HFC so I STILL have to negotiate for $5000 somewhere.  Or in your scenario $11,000 to HFC and Wells only allowed $8,000.  I'm in the SAME exact boat!!  I still have to negotiate somewhere for the difference.  The final HUDS in all closings match.  It's the preliminary numbers I'm negotiating like in every transaction.

I'm not deceiving.  I'm negotiating...until the final HUDS.  Even the LENDERS know the numbers are preliminary which is why 24-48 hrs or so before closing the lender gives their stamp of approval on the final HUDS.  They expect the numbers to be estimates up until closing



Thom Colby said:

Smitty,

 

I never said there is a "Violation".

 

Thom Colby



Smitty said:


Richard and Thom,

Where is the violation?  Are you saying every first HUD you submit is an ACTUAL FINAL HUD?  No one here can give exact numbers intially. We ALL give preliminary HUD's based on ESTIMATES. Water payoff ESTIMATES, Sewar payoff ESTIMATES, closing ESTIMATES, tax ESTIMATES.  I'm ESTIMATING the a payoff to the second lender of $8000 not knowing if they will accept.  I'm ESTIMATING to the first lender that they will allow $13,000 to the second.  My lawyer prepares these HUDS, so if I was doing something illegal, I'm sure I'd know.  Only until we know who will accept what amount for a payoff can we try to prepare a FINAL HUD.  If the first lender OK's $13,000 to the second, and the second lender accepts $8,000 then I call and tell them I can get them more money. 

 

Both HUDS match at closing.  I think everyone is missing my initial question.  Does the second lender have a right to know what the first lender is getting BEFORE the FINAL HUD? 

This is the specific gist here: "Does the second lender have a right to know what the first lender is getting BEFORE the FINAL HUD? "

Is that some sort of failure to disclose? Does one lender have the legal right to know what the other lender is being offered?

I don't think so. And remember, no one is stopping the lenders (and PMI companies) from communicating amongst themselves. They CHOOSE not to. Our lives would be a lot easily if there was only ONE negotiation from the start ...

 

 


Smitty said:

Thom,

 

You wrote "RESPA" in your response.  What RESPA violation is occuring here?

"By providing two different HUDs to two different lenders for the same transaction, you are deceiving both lenders.  Further you are creating a worse situation for both the borrower and you.  What happens when ASC (Wells) comes back to you and says - nope, only $3,000 to the 2nd and HFC comes back and says we want $11,000 at a minumum?"

 

I don't see how I'm creating a WORSE situation.  If Wells is only going to allow $3000, then that's it.  How is that any worse than if both initial HUDS were the same?  I still only alloted $8000 to HFC so I STILL have to negotiate for $5000 somewhere.  Or in your scenario $11,000 to HFC and Wells only allowed $8,000.  I'm in the SAME exact boat!!  I still have to negotiate somewhere for the difference.  The final HUDS in all closings match.  It's the preliminary numbers I'm negotiating like in every transaction.

I'm not deceiving.  I'm negotiating...until the final HUDS.  Even the LENDERS know the numbers are preliminary which is why 24-48 hrs or so before closing the lender gives their stamp of approval on the final HUDS.  They expect the numbers to be estimates up until closing



Thom Colby said:

Smitty,

 

I never said there is a "Violation".

 

Thom Colby



Smitty said:


Richard and Thom,

Where is the violation?  Are you saying every first HUD you submit is an ACTUAL FINAL HUD?  No one here can give exact numbers intially. We ALL give preliminary HUD's based on ESTIMATES. Water payoff ESTIMATES, Sewar payoff ESTIMATES, closing ESTIMATES, tax ESTIMATES.  I'm ESTIMATING the a payoff to the second lender of $8000 not knowing if they will accept.  I'm ESTIMATING to the first lender that they will allow $13,000 to the second.  My lawyer prepares these HUDS, so if I was doing something illegal, I'm sure I'd know.  Only until we know who will accept what amount for a payoff can we try to prepare a FINAL HUD.  If the first lender OK's $13,000 to the second, and the second lender accepts $8,000 then I call and tell them I can get them more money. 

 

Both HUDS match at closing.  I think everyone is missing my initial question.  Does the second lender have a right to know what the first lender is getting BEFORE the FINAL HUD? 

ENOUGH SAID, RIGHT PEOPLE??
1 HUD, 1 HUD, 1 HUD......

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