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