Are buyers required to repay seller concession?

[rabo119]

The seller of our home emailed me at 8pm, then showed up at 11pm the night before closing threatening to not show up the next morning to close. He required us to sign a promissory note stating that we will repay him for the seller concession. As stated in the note, he wanted 10 post-dated checks to make sure he will be repaid.
Then he brought his girlfriend who is a notary, and she notarized it.

My question is: Is this legal? What is the name of your state?

[seniorjudge]

Based solely on the information in your post, you are on the hook.

[nextwife]

Originally Posted by rabo119

The seller of our home emailed me at 8pm, then showed up at 11pm the night before closing threatening to not show up the next morning to close. He required us to sign a promissory note stating that we will repay him for the seller concession. As stated in the note, he wanted 10 post-dated checks to make sure he will be repaid.
Then he brought his girlfriend who is a notary, and she notarized it.

My question is: Is this legal? What is the name of your state?

I would think this arrangement to be illegal. The HUD that you sign at closing, also signed by seller, affirms that no undisclosed financial agreements exist between you and the seller. The creation of an additional, undisclosed to the lender, debt, affects the ratios upon which the loan approval was based.

You SHOULD have talked to your agent immediately! This is a HUD violation. And contrary to the contract in which the sellet agreed to provide this CREDIT.

WAS THIS SHOWN ON THE HUD Disclosure????

[rabo119]

dear next wife,
No this was not on the HUD.
As I said, the night before closing, the seller just showed up with his notary girlfriend unannounced at 11pm. He told us to either sign the promissory note and give him the post-dated checks, or he would not show up to closing.
After trying to close on this house for over 5 months, we did what he wanted so he would come to closing the next day.

We did not have an agent as this home purchase was between friends, or so we thought. We did however, have a mortgage broker whom I did contact immediately following the email at 8pm. Being a mortgage broker, he told me to just do whatever it takes to get him to the table and we could deal with the rest later.

The loan underwriter did tell me that the seller could not do this at the last second, but I spoke with her after it was already done.

[rabo119]

Dear seniorjudge,
I apologize, but I'm not sure I understand what you mean when you say that I am "on the hook."

Would you please explain this to me.
Thanks.

[Choosymother]

This sounds like a variation of a common scam used to boost the price of the mortgage and accommodate a buyer with less than stellar credit.

It appears that the seller has conceeded to covering most or all of the closing costs when in reality they are being paid by the buyer through a higher mortgage amount, or in this case by extortion.

Bad news. I would talk to a lawyer or an independent mortgage broker before I closed.

good luck!

BTW, what was YOUR understanding of what was to be paid and how?

[VeronicaLodge]

Originally Posted by rabo119

Dear seniorjudge,
I apologize, but I'm not sure I understand what you mean when you say that I am "on the hook."

Would you please explain this to me.
Thanks.

you willingly signed a document making promises and had it notarized then wrote out post dated checks.

why did you do that?

[rabo119]

Originally Posted by VeronicaLodge

you willingly signed a document making promises and had it notarized then wrote out post dated checks.

why did you do that?

We had been trying to close on this house for almost six months, a house we had been living in and leasing from the landlord for a little over tree years. FHA finally was able to work it out with a seller concession, and listed that in the HUD, The seller/landlord agreed to that.

The final closing was set for Friday morning. Thursday night at 11pm, without any advance warning, the seller/landlord showed up at our home and told us if we did not sign this promissory note and give him ten post-dated checks, he would not be at closing the next morning and would have us evicted. The notary was his live-in girlfriend who he brought with him, who is a notry.

It was late at night, we could not call our attorney, or really anyone. After being figuratively back up against a wall, we did what he wanted so that he would be at closing. He was and we did close on the house.

This is why we signed the promissory note, one that he just downloaded off the internet. This promissory note and the post-dated checks is to have us pay him back directly for the seller concession.

[lwpat]

Close the checking account and tell him to take a hike.

[Zigner]

What, exactly, does the note say?

[rabo119]

Originally Posted by Zigner

What, exactly, does the note say?

I've taken out a little, but I've included the basics. I found this exact letter, with just a few differences, on a public site where you can download legal forms for free. Gee, I wonder where this legal, official promissory note they made us sign came from! ----------

On this date of --- ---, 2008, in return for valuable consideration received, the borrower[s], --- and --- jointly and severally promise to pay to --- , the "Lender", the sum of $--- Dollars...

Terms of Repayment (Periodic Payment)

Place of Payment - all payments due under this note shall be made with -- post dated checks that the Lender will cash at the appropriated dates or at such other place as the holder of this Note may designate in writing.

Default - In the event of default, the borrower[s] agree to pay all costs and expenses incurred by the Lender, including all reasonable attorney fees (including both hourly and contingent attorney fees as permitted by law) for the collection of this Note upon default, and including reasonable collection charges (including, where consistent with industry practices, a collection charge set as a percentage of the outstanding balance of this Note) should collection be referred to a collection agency.

Acceleration of Debt - In the event that the borrower[s] fail to make any payment due under the terms of this Note, or breach any condition relating to any security, security agreement, note, mortgage or lien granted as collateral security for this Note, seeks relief under the Bankruptcy Code, or suffers an involuntary petition in bankruptcy or receivership not vacated within thirty (30) days, the entire balance of this Note and any interest accrued thereon shall be immediately due and payable to the holder of this Note.

Severability of Provisions - In the event that any portion of this Note is deemed unenforceable, all other provisions of this Note shall remain in full force and effect.

Signed Under Penalty of Perjury, this -- day of --, 2008

_______________________________________
(Borrower)

_______________________________________
(Borrower)



Signed in the presence of:

_______________________________________
(Witness)

_______________________________________
(Notary)

[Zigner]

It doesn't matter where it came from. You signed it.

[VeronicaLodge]

Originally Posted by rabo119

We had been trying to close on this house for almost six months, a house we had been living in and leasing from the landlord for a little over tree years. FHA finally was able to work it out with a seller concession, and listed that in the HUD, The seller/landlord agreed to that.

The final closing was set for Friday morning. Thursday night at 11pm, without any advance warning, the seller/landlord showed up at our home and told us if we did not sign this promissory note and give him ten post-dated checks, he would not be at closing the next morning and would have us evicted. The notary was his live-in girlfriend who he brought with him, who is a notry.

It was late at night, we could not call our attorney, or really anyone. After being figuratively back up against a wall, we did what he wanted so that he would be at closing. He was and we did close on the house.

This is why we signed the promissory note, one that he just downloaded off the internet. This promissory note and the post-dated checks is to have us pay him back directly for the seller concession.

I understand all that you already said that. but you are a grown adult, he didn't put a gun to your head, you signed it and wrote checks. I was trying to clarify for you why SJ said you were on the hook.

you can explain it to me again, but it doesn't change the fact you willing signed a promissory note and wrote out checks.

[nextwife]

An undisclosed side agreement like this is still lending fraud and a HUD violation.

[seniorjudge]

Originally Posted by nextwife

An undisclosed side agreement like this is still lending fraud and a HUD violation.

I think you are correct; but who is (are?) the guilty party (parties?) here.

Both of them, I'd say.