Expert: Consuelo Herrera, International Accountant and Fraud Examiner - 9/13/2008

Question
"Please answer what u can

Background:
under the affordable housing  program there are lotteries for  heavily subsidized luxury apartments and houses and when selected and given a low log number , if u qualfiy u can get the mortgagge


Is there any benefit in buying a condo or other real estate although u cannot pay the mortgage?
By having someone underwrite it  or  serve a s guarantor  but  then  you alone will  (according to side deal ) be  responsible for  paying  for it and went u cant possibly do so, the  ownership of the condo will go to the person who got  u the  approval and  ultimately  gets u the approval of the fha mortgage, (bankrolls it) so if they fund it (when u cant possible do it yourself) they want to profit
What profit will the benefactor want?
What is reasonable? Percentage wise?
Is  a plan to have you the borrower default on the mortgage and then the  mortgage provider acquires ownership  and then flips  the property or  capitalizes on it in someway and then  he will give u some of the process or money in advance , a reasonable plan?(kickback)
Is this legal?
Enforceable?
What safeguards are needed?
What steps and measures are in place by the authorities so c things like this don’t happen?
What r the pitfalls to avoid?
The idea is if u win a government subsidized property in a lottery and all u has to do is fund a mortgage
How do u do it?
Answer: by bringing in third parties and as an incentive for their help, - offer to default and then they can sell the property for its real value market rate pre government subsidy), and split the proceeds

Any other ways that you know to profit on a scenario like this, where with help u can   finance a real bargain and then although, for you it cannot last u can get in and out in time to turn a nice profit?
Anyways u can think of so u don’t lose the chance?
What other incentives can b offered?
What about a roommate situation for renters? What happens to the section 8?
And which voucher is utilized?
What reasonable accommodations and decreased rental /mortgage payments is avail for disabled applicant and/or regular voucher holders, - homebuyers?
What happens in a situation where one is disabled and one not?
What creates financial interdependence and /or a domestic partnership for gaining qualified applicant status?
If a non disabled partner/applicant marries a working person what happens to the social security disability money?
Ditto for the section 8?
Is there any way to avoid the partners; -whether relationship, domestic partner, spouse) -income increasing the residents, tenants or owner’s share of the rent/mortgage?
A section 8 subisdy recipient  usually pays 30% of their income towards the rent
So the status of the partner or roomie  may affect his share


"can other mortgages be added on?
or substituted for the market rate  typical one?
such as HOYO or  sonyma etc
“One is called a LEASE/PURCHASE and has the Landlord/Seller and the Tenant/Buyer making a FIRM COMMITMENT to renting and then a  purchase/sale of the property between the Tenant & Landlord on a specified future date. The other is called RENT WITH OPTION  TO OWN. This is similar except the Tenant/Buyer has the ability to either purchase OR walk away from the property at the end of the specified rental time! Not a Firm Commitment, just an OPTION !”how does this jive with our discussion? Or rental income, can I rent the property out and  use rental income to pay mortgage?


Answer
Dear J,

Thank you for writing. I am sorry but this is not an area of my expertise.

I hope you find this answers with a professional in banking or real estate.

I wish you the best in your endeavors.


Sincerely,


Consuelo Herrera, CAMS, CFE