Can a private seller offer a buyer cash rebates?

[jyoche]

California


I have a property that is listed for $360,000 and the buyer wants to pay $380,000 and have the additional,
"$20,000 placed into a non-revocable demand for payment to CBUSA company that may be secured by deed of trust, only to be paid and satisfied through escrow. Demand will be paid on amendment form approved by seller and will be non-revocable."

What is my legal exposure?
This is assuming that the property will appraise for at least $380,000 so I do not see this as bank fraud. Is this a correct assumption?
Thank you,

Kevin Osborne

[Bigfoot]

When money is held in escrow, I thought it was to pay for a service that had not been completed as of the closing date. Why are you calling this a cash rebate?

[nextwife]

I have come across these programs. The seller "lends" their equity to a "payoff entity", who takes a percentage for facilitating the transaction. At closing , the gifted downpayment is shown as a payoff by the seller to the facilitating entity.

The jury is out on this, I've heard of no determination that it IS RESPA compliant. Those I know have taken the position that, as long as everything is disclosed to all parties, especially the lender doing the purchase money mortgage, then it is OK to do the transaction.

[jyoche]

Originally Posted by Bigfoot

When money is held in escrow, I thought it was to pay for a service that had not been completed as of the closing date. Why are you calling this a cash rebate?

The Buyer is wanting to have the $20,000 given back to him in the trust account and is going to utilize it as security for future expenses.

[nextwife]

If paid out of closing proceeds, and disclosed on the HUD, then it is allowable, as long as it is allowable to the new mortgage lender.