I've been reading up on law and loan fraud and I wanted to know your thoughts on owner carry financing and silent seconds(2nd mortgage note)

Description of a silent second:
These are notes created from the sale of real estate with a seemingly good down payment, a new first loan and the second trust deed or mortgage note. However, the first lender is unaware of the second note, which is where the name "Silent Second" comes in. These notes are usually kept silent because the buyer cannot qualify for a large enough first loan.

An example...

Let's take a look at a real-life example. The buyer purchases a single family home for $135,000. The first lender agrees to make a loan of 80% or $108,000. Therefore, the buyer has to come up with $27,000, right? Normally this would be correct, but not in this case! The buyer and the seller make a side agreement to create a note outside of escrow and without the knowledge of the first lender. They claim the buyer has put down $27,000, but in reality he only puts down $15,000. The buyer gets the first loan for $108,000 and gives the seller a "Silent Second" for $12,000 which is the remaining balance.

The first lender is unaware of both the smaller down payment and the second note for $12,000. If the lender knew about these factors, it would have never approved the loan.

Well what i am seeing is creative financing is just like irs taxes in that each year the government disallows new ways people come up with saving money on there taxes.Same with investing what is deemed unknown or ok is later considered fraud by the government,i believe sometimes people are so creative with this stuff the government doesn't even know whether to allow it or not.Alot of people take the approach if they hadn't said it is illegal yet then keep doing it until they say you can't.

A friend of mine used to work for the irs and when a tax return came in even if they had found a new way to save taxes the irs employee would look at it disallow it and then make new rules for the next year.The irs really is a big government scam that pilfers money for the government to pay specialist government programs.

not giving legal advice

Better than average chance that if that silent 2nd becomes known the first lender just may consider that fraud.

correct. i just wanted to share the knowledge

That is very interesting to read from an IRS inside view.

Sounds like your IRS friend was full of it. If things worked the way he said everyone would pay more taxes......or the person being disallowed had no representation. If audited always hire an Enrolled Agent...

How would the lender not find out about the OWC? Wouldn't it be detailed on the purchase contract/addendum.

Also, Why would the lender care about it? It's going to have a 1st position lien on the property.

Lenders care because they suffer from a horrible disease known as banker blindness! No, seriously, though, the lenders want anything that will alter a borrower's debt to income ratio. The higher the DTI, the greater the chance of default. Or, so they believe anyway...not necessarily true, hence the banker blindness affliction.

I think there's a hole in your tinfoil hat...

I do A LOT of Owner Carries... IRS rules say if you carry 5 or more, why then you are a lender and beware... met a guy in 1994 and had 114 homes to sell - I know the ins and outs... IRS or not...

Onward....Simmons

He was a GODSEND; 10% down, 1/4 below current interest rates, 30-year, NO BALLOON... awesome guy - is still around!

Onward... Simmons

Mod comment. Do you know how to edit your post and add to it? Let me know if you need help. PM me and I can help. -GP

Maybe it is not super realtor. Maybe it is his source.

Just a point of view to consider Jflynn.

At any rate tin foil is cheap so some one needs to plug that hole lol

Do you have actuall experience of the inner working of the irs jflynn or paul oaks,i don't believe you do.

I don't either,people can either believe or not beleive something it is there choice,why do you think the senate reform committee had irs employees hiding behind curtains with there voices altered talking about the inner workings of the irs?

I have seen many cases of wrongdoing by the irs,they have more accountability in place now than in the past but are still in need of a major overhaul,there are decisions made everyday by irs employees who do not follow protocol,this happens day in and day out.

The irs comes after people and audits them not based on who should be audited or what should be allowed but by who they think they can collect on and win.Most returns are looked at the beginning level by people who don't know what the hell they are even doing.I see advertisements all year long by the irs to be employed by them get payed 7.25 an hour to look over our tax returns and tell us if they are right or wrong after taking a silly course.To me the irs is a joke,sub-standards,the right hand not knowing what the left is doing.

When my father died when i was fifteen my mom and dad had been filing a joint tax return.When he died they killed off my mom along with him by mistake.It was a nightmare getting child-survivor benefits.It took years and years to get the problem fixed,when they said my mom was alive again then they said she should be penalties and interest for the years she didn't file taxes,but they wouldn't accept a return on a dead person.Each time you called the irs they are all connected to a network in the u.s. you call the same 800 number every time but one time you will get someone in new york,the next time l.a.,the next florida and each time you will have to resay your situation and it gets very frustrating.Once a year they will have a big gun that comes down to the local state irs office to solve tax problems that aren't getting resolved,usually the line is very long to see this person and sometimes you won'r even get to see them and tell them what's going on,as for my mom they finally just put here in the dead letter file as the issue was never resolved.


If people truly knew how screwed up the irs really was it would really scare you.The only peopl ethat aren't concerned are living in a false world because nothing has happened to them yet.

This is my experience with the ever so great irs,people can believe what they want to i base my beliefs on fact and experience.

super,
You just admitted you have NO facts about the inner working of the IRS. Then you say you base your comments on facts...

What I do have is a degree in Finance so I have some idea how the IRS operates and your comment that you heard from someone else that IRS disallows all then rewrites next years code to disallow previous deductions is just plain nonsense!

ok reread my post i didn't say disallows all i said "they review new ways or strategies people try to do on there taxes and then make a decision if they don't like it to disallow it and then write a new code or rule against trying to get a deduction that way.I didn't say i had NO facts of the irs,i should have said that none of us are experts of the inner workings of the irs.I never said disallows previous deductions,i think you are reading into and misinterpreting my posts.

Anyways on to more fruitfull posts,good luck to all.

your comment that you heard from someone else that IRS disallows all then rewrites next years code to disallow previous deductions is just plain nonsense!

What kind of facts would there ever be available to support something like this though Paul. If it was made public the IRS would look bad. It is possible that this does happen. I have nothing to support it myself and I do prepare taxes but that does not mean anything either considering I was employed by a CPA and no training was given at all. (Here read the book lol)

It is ironic how some tax saving loophole opens or is found then it is closed by the IRS. Until laws change people take advantage including the IRS employyes of course in some cases.

A financial degree would have no merit in determining something like this was true or not. His friend is "inside and working for the IRS" We would never know because we are not.

I think his source is bragging myself and bending the real truth. But I am in no position to even imply that considering 1) I do not know him and 2) I do not know his friend.

I like your opinions. You make perfect sense. It could be true. Either of you could be right. But we are not employees of the IRS and he is just quoting what someone who is told him.

It is enough to make a post on the forum and discuss it. But you are basically calling him a liar indirectly. That is a little bold I feel.