Issues have modified with the massive variety of REOs (bank owned) properties and quick gross sales available on the market and coming to market. The technique utilized by many buyers who’re wholesaling has been to place a property below contract and try and wholesale it in the course of the inspection interval. If unsuccessful, the investor cancels the contract and goes on to the subsequent property fake bank statement.
Itemizing brokers and lenders have began requiring POF and lately, in some instances, these POFs have to be within the identify of the customer. That nearly eliminates many buyers from even making provides. Inventive buyers have been utilizing a Letter of Credit score (LOC) from hard-money lenders – many of those hard-money lenders shouldn’t have cash or willingness to shut the transactions however make cash by merely charging for the LOC.
Extra inventive buyers have gone to the intense of manufacturing their very own POF by merely taking their private bank statement, changing it to a pdf file after which modifying it with a pdf editor so as to add two digits to the present stability. It really works very nicely till a lender checks your bank statement and sees you’re about $100,000++ quick.
I’ve had two buyers inform me they “acquired caught” utilizing falsified POF by the lenders the place they submitted their quick gross sales. In each instances, their private bank was the identical lender on the quick sale – sufficient stated. In each instances the agent went screaming to the investor and threatened who is aware of what, however within the remaining evaluation the bank bought the properties to the identical buyers.
I acquired one other name immediately from a nationwide bank the place I had a considerable checking account. I say one other name as a result of prior to now month I’ve had not less than a dozen calls from this nationwide lender’s quick sale division checking to see if the Letter of Credit score (LOC) I gave a Pupil was legitimate for the person who submitted it.
I additionally included a statement of my precise account so this lender had reviewed my account stability, my common stability and possibly even known as my personal banker. At any price, I had the cash so there was no difficulty however they did test.
I’m not making any ideas about what it’s best to do or not do to get a POF, LOC or just to attempt to get by with out one. When you really feel that you would be able to’t do offers with out one, merely deal with coping with owners direct who’re motivated sellers and haven’t listed their properties (single-family properties or multi-family properties) with a Realtor®.
To your limitless success!