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Credit Investor, Straw Buyers, and Mortgage Fraud
| | Thursday, April 06, 2006 @ 08:00 AM EDT
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Contributed by: James hunter
James hunter Properties
Read more archived articles about Credit and Finance
I know many of you may know or have heard that the FBI has is cracking down on mortgage fraud and in their attempt to due so certain
practices that a lot of investors use may be subject to criticism and prosecution. A hot topic of discussion these days along these lines
is what is consider a credit investor in a real estate
transaction? Is a credit investor legal? And how is a credit investor
different from a straw buyer?
I will answer these questions showing three major 3 differences
between a legitimate
credit investor from a bogus straw buyer.
A straw buyer uses a stolen identity or lies on the loan application to qualify for owner-occupied financing;
A credit buyer uses their own identity and their credit is good enough to qualify for non-owner occupied financing.
A straw buyer is offered money just for the use of their name on the loan application and may never even know what the investment is.
A credit partner is involved in the decision making process, understands the investment, and is offered a split of the proceeds when the deal is profitable.
A straw buyer transfers title and relinquishes control to the mastermind behind the scheme once financing is in place.
A credit partner remains on title with the other partners (eg. tenants
in common, tenants by the entirety, etc.) or arranges to have title held in escrow (eg. a land trust) until the property is sold and profit is split between the partners.
These qualifications in my opinion are the finer distinctions that help investors use a credit investor is the appropriate way.
Note: James Hunter is a commercial mortgage consultant for Alpha
Omega Financial. He can be reached at 516-404-3268
Alpha Omega Financial specialized in the high loan to value no debt service commercial real estate loans up to 90% loan to value.
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