Would this be considered mortgage fraud?

Asked by Steph, Charlotte, NC Tue Nov 10, 2009

Can I buy my fiance's house from him at a fair market value in order to 1) for him to get cash out that we will use as a down payment on our new home (we could get more this way then on a HELOC 2) lock in a lower rate on his home without refinancing, and be able to keep it as a profitable rental because although we will be increasing the mortgage balance, our monthly payment will be lower.

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5
John Shellin…, Agent, Pearland, TX
Tue Nov 10, 2009
Yes, it would probably be considered mortgage fraud. There is no intent to owner occupy.
1 vote
Daniel Eberw…, Agent, Clayton, NC
Tue Nov 10, 2009
No, as long as you are 100% upfront with the lender regarding your intentions. Since it is going to be a rental property, you'd likely need more of a down payment (last I dealt with one, lender wanted 20% down for investment properties) to purchase it. I just purchased a property from a family member, and all the lenders I talked with had no issue with this. All they cared about was my credit score, income and ability to repay the loan.
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0 votes
Allyson Ward, Agent, Charlotte, NC
Tue Nov 10, 2009
As a non-loan officer, I would strongly suggest you call your lender OR prequalify with a bank first. Try Bank of America or whomever you bank with first. Tell them your idea and that removes the loan fraud issue. They may even have a better way to accomplish your goal.
0 votes
Chris Hedrick, Agent, Charlotte, NC
Tue Nov 10, 2009
Hey Steph,

Hope you are doing well and having a great week. I am of the belief that since you are not married yet that this could be an acceptable situation although you would have to purchase his house as an investment home since it will not be your primary residence which means you will probably have to put 20% down but by NO MEANS AM I AN EXPERT and am just soley giving you an opinion. If you would like to contact a very reputable mortgage broker that I deal with on a regular basis you can call Erik Stephens at Covenant Mortgage, his direct # is 704 887 4911 and he will shoot you straight on the issue. If you need help in looking for your new home I would be more than happy to assist you so if you would like to give me a call or email me and give me some of the parameters of what you are looking for I can do some searching for you.

Thanks so much,

Chris

Chris Hedrick
Carolinas Choice Realtors
704.965.7915
chris@MyCharlotteRealEstateBroker.com
0 votes
Scott Pridem…, Agent, Charlotte, NC
Tue Nov 10, 2009
Hello Steph
Many lenders will not allow a relative to purchase the home of a family member. If you can find a lender that would allow it after you have explained what you want to achieve, the home would still need to appraise for the contract amount. I would just call your lender and ask if they would permit it. If you don't have a lender in mind...call Troy Meeks with Alpha mortgage. Troy is located off Fairview Road in South Park. It's probably worth asking about.
Best,
Scott A. Pridemore
0 votes
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