Maybe that's the case now, but there used to be all kinds of techniques. Common to see Purchase and Sale Agreements providing that "Seller will pay a portion of buyer's costs, up to 3% of sale price."
Also, incredibly, buyer didn't have to have his own down payment if it was contributed to him by a non-profit corporation. The idea was for something along the lines of grants, etc. Well, someone figured out that loophole in short order, by starting a non-profit corp. FOR THE EXPRESS PURPOSE of accepting "contributions" so they could then give them to buyers, less a modest fee, of course. No restrictions on who could make the "contributions". So if the appraisal came out high enough (and most of them did- the appraisers know which side their bread is buttered on), seller would "contribute" enough for the down payment. Whole thing done within the escrow. So, seller wants $200,000; appraisal comes in at $225,000; They change the sale price to $225,000, Seller "contributes" $25,000 to ABC Corp, which then gifts it to the buyer, less $2000 for handling. Buyer pays $20,000 down on the the $225,000 property (more than enough to qualify for a mortgage in those halcyon days) and gets $3,000 back from closing to boot; Seller gets $205,000 which is 5 grand more than he was expecting; Scammer corporation gets $2,000 just for being there, and everyone is happy. Except possibly the mortgage holder, who's now stuck with a $205,000 mortgage on a house that's now worth $150,000, whose owner has walked because he's now "upside down" in the deal, and his interest rate just went up, and what the heck, he didn't have anything in this deal anyhow, so what's the incentive to stay? And that, boys and girls, is the stuff of which mortgage meltdowns is made.
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Today's Featured Article - History of the Nuffield Tractor - by Anthony West. The Nuffield tractor story started in early 1945. The British government still reeling from the effects of the war on the economy, approached the Nuffield organization to see if they would design and build an "ALL NEW" British built wheeled tractor, suitable for both British and world farming.
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