Creative Financing vs. Mortgage Fraud
Does legitimate creative financing exist or is it all just a varying shade of mortgage fraud?
There often ‘appears’ to be a very fine if not fuzzy line between begin creative with financing and committing illegal mortgage fraud. Many real estate investors and home buyers struggle with this and find themselves on a tightrope walk when they don’t need to be.
There is actually a very clear difference between the two. One will get your more deals and better terms, the other just a bright colored jumpsuit and a terrible view, with some unpleasant roommates.
Innovation and creativity is great providing it doesn’t break the law. However, it is incredible how some home buyers and real estate investors are still attempting to be overly creative and are committing fraud, especially after so many have gone to jail for it, and often to the tune of some very lengthy sentences.
Some may claim they didn’t even realize what they were doing was wrong because they have become desensitized and the level of corruption out there has bred an “everyone else is doing it” attitude.
There’s an easy test to tell the difference, even if your ethical compass is out of whack. If you have to lie, cover up or sign anything which isn’t true to get a loan then it’s mortgage fraud.
Your friends may have gotten away with it multiple times and others may have been doing it for years for big profits, but are you ready to head to the pen for it, without crying about it? In not, “don’t do the crime if you can’t do the time”.
There are lenders out there who will invite legitimate creative structuring as well as sellers offering financing. Just be transparent and you won’t run into issues, but run when they tell you to hide something.