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LawTalk
LawTalk, Attorney
Category: CA Real Estate
Satisfied Customers: 35309
Experience:  I have nearly three decades of legal experience, including Real Estate Law, and have held a Real Estate Broker's License.
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My son just bought a house that I think was handled entirely

Customer Question

My son just bought a house that I think was handled entirely wrong. Sale asking 325,000 - appraisal came back 345.000. I used to has a RE license. There is nothing in that area that even begins to match 325,000. I feel it is a preditory loan. Also, the
seller lent my son 10,000 to pay off a bill that was holding up closure. Of course, now my son will owe that 10,000 to the seller. And the realtor arranged all this. Loan rates 4.85 which I think is very high for the current market. It was impossible for me
to advise my son because he was so anxious and deaf to anything i was warning him about. So, I know shortly I will have to intervene because they actually are not going to be able to afford this loan. They put 10,000 down and have PMI added to their payment.
So - I need to know what my options would be. Don't know what is involved in a predatory loan charge - - but I do know how to do modifications. How long after the close of escrow can they file for modification?
Submitted: 1 year ago.
Category: CA Real Estate
Expert:  LawTalk replied 1 year ago.
Good afternoon,
I'm Doug, and I'm very sorry to hear of your son's situation. My goal is to provide you with excellent service today.
As a real estate expert I am sure you realize that once the sale is complete there is little that you can do about your son's poor decision. A 4.85% rate is not in and of itself predatory and may simply be indicative of a less than stellar credit score. In fact anything between about 4 and 5% today is pretty standard.
If the mortgage loan was to be sold to the feds, then the $10,000 loan made by the seller almost certainly was not reported on the HUD-1 and made the transaction illegal. While the appraisal may have been high---again, that doesn't make the loan illegal and your son appears to simply have not done his "homework". I empathize with your angst and desire to help him, but at this point in time, anything short of a later modification is not likely to help.
As for the modification, they can file at any time---but that will raise a red flag and as it appears that there may have been mortgage fraud---relating to the unreported loan from the seller---there is a risk of your son being caught up in a criminal investigation.
I understand that you may be disappointed by the Answer you received, as it was not particularly favorable to your situation. Had I been able to provide an Answer which might have given you a successful legal outcome, it would have been my pleasure to do so.
If you have additional questions, you may of course reply back to me and I will be happy to continue to assist you further until your questions have been answered to your satisfaction.
Kindly take a moment to rate my service to you based on the understanding of the law I provided. Please understand that I have no control over the how the law impacts your particular situation.
Thank you,
Doug
Customer: replied 1 year ago.
This is not an FHA loan. It is some loan company I have never heard of before. Zillow appraised the value of this home at 280 and my appraisal research finds that is a realistic valuation. But the realtor hired the appraiser. Why would my son be in trouble for the 10,000 loan? He did not know that was not legal. (Yes I know - ignorance etc) And the seller paid the bill off directly before the close of escrow and arrangement is that my son will repay him with his next tax return.
Customer: replied 1 year ago.
Also - because of tight financials, the broker paid the closing costs. At close they have $25 in their checking acount and less in their savings.
Expert:  LawTalk replied 1 year ago.
Hi,
The loan doesn't have to be FHA for it to be bought up by the feds, making it subject to RESPA and requiring the HUD-1. Only about 1% or less of loans are not HUD-1 mandatory loans and you are correct, the fact that your son didn't know the law is not an issue.
Again, the valuation of the property really has little to do with whether there was a loan abnormality. And maybe there is something about the property which resulted in the value being higher. I certainly would not know, and a simple comparison study is not always sufficient.
You wrote: "And the seller paid the bill off directly before the close of escrow and arrangement is that my son will repay him with his next tax return."
This loan should have been immediately reported to the lender and I presume it was not. Therefore it was a loan based on the sale of the property, not set out by the HUD-1 and therefore would have been illegal under federal law.
You may reply back to me using the Reply link and I will be happy to continue to assist you until I am able to address your concerns, to your satisfaction.
Please remember to rate my service to you when our communication is completed.
I wish you and yours the best in 2015,
Doug
Expert:  LawTalk replied 1 year ago.
This seems like a very serious situation to you, and your questions and issues suggest that an in-depth conversation might better suit your needs. If you are interested, I can offer you a phone conference as opposed to continuing in this question and answer thread. I will make that offer to you after I get this posted to your question thread. All you need do is accept the offer if you would like me to call.
Thanks in advance,
Doug
Customer: replied 1 year ago.
I would like to accept this offer but I would like to know what my options might be and be prepared with any and all questions I would need answered for a call. Right now I am still very in the dark as to even whether I have options.
Expert:  LawTalk replied 1 year ago.
Hi,
It was my hope that after our conversation thus far that you would not feel that you are completely in the dark.
As a non-participant in the purchase of the property you "personally" don't have any options. And based on what you have told me, I don't see any options your son has either---other than to avoid possibly incriminating himself in a mortgage fraud scheme.
Please keep in mind that, even though you have already paid your deposit money over to JustAnswer, until you rate me highly for my service, I will not be paid for having assisted you with your questions.
If you have additional questions, you may of course reply back to me and I will be happy to continue to assist you further until your questions have been answered to your satisfaction.
I wish you well,
Doug

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