Skip to content

Addendum Conundrum

Answered by: 

Question: 
If I have an addendum stating that the purchaser of a property is to receive all equity in home at closing, how does that show on the HUD-1 statement. What is the proper way to do this? Is this allowed? Example borrower and seller agreed on sales price of $100,000, home has appraised for $120,000 and purchaser has loan from lender of $120,000. After fees and payoffs, etc., purchaser is due back $10,000 and lender does not want this on HUD-1 statement. The seller has agreed to pay this amount to purchaser. The lender does not want to see this addendum. My question is can we do this? How should the HUD-1 read? Why doesn't the lender want to see this addendum? As a realtor should I do this addendum?
Answer: 

This sounds like a classic case of mortgage fraud. The loan amount on any loan from a reputable lender on any home is usually not more than the lesser of the sales price or the appraised value. If this is a bank, this transaction needs to be brought to the attention of bank management.

If the lender is trying manipulate the HUD-1 - he is probably getting a cut of the action. Again, this has all the signs of mortgage fraud and something is very wrong with this transaction.

First published on BankersOnline.com 9/03/07

First published on 09/03/2007

Filed under: 
Filed under lending as: 

Search Topics