Expert: Terry Leeders - 11/15/2007

Question
we purchased a home on march 29th from a gentleman.  the asking price was 129,900 and appraised for $129,900 we offered 129,900 if he would use 4% of that ($5,196) to pay towards are closing costs.  he agreed, he was not bankrupt, there were no liens on the home and we received a free and clear title and a warranty deed. the house was ours.

the seller of the house we bought then filed for chapter July 9th 2007 (90+ days after) we received a letter from the bankruptcy trustees attorney on Nov 1st stating that the seller sold the property for inconsiderate value and when he was insolvent and that the 5196 dollars in concessions that he got from our mortgage company to pay towards our closing costs appears to be fraudulent and they are requesting us to contact them regarding paying this 5K back to the trustee.  Does this seem right?

1. can we lose our house from this
2. if so what happens with our mortgage loan
2. are they just fishing for money from everyone hoping someone bites the hud statement shows seller concessions of 5k but not what they were for..  I mean at the time the guy had every right to sell this property right?  The money he gave us was in the signed agreement and only for the purpose of paying towards our closing costs.  Its not 5K he could have used to pay something else.  It was on the open market and we found it on a realty site and made an offer.  We have all the documentation of a free and clear title, the purchase agreement.

Answer
Hi Nick.
Unfortunately, the court has the power to reverse some transactions to bring the cash back to the bankruptcy.  You need to speak to a local attorney.  You may have a claim to file in that bankruptcy case.  This won't make you lose your home, but you would need to come up with the funds to pay to the trustee.