There is a new fraud scheme which is being perperrated primarily by the "selling Real estate agent or broker". The scheme also involves a loan officer and a title company. There is nothing legal about this scheme and participants risk significant civil and criminal penalties by engaging in this illicit fraud scheme designed to defraud the lender or secondary market investor. Here is a example that may best describe how the scheme works. A residential property is listed through the Multiple Listing Service for $375,000. The buyer, throught their real estate broker, makes a contract offer that calls for the seller to pay a percentage of the buyer's closings costs adn is contingent on financing. Everyth proceeds inb a usual manner until closing. At closing the seller is shown a closing statement that reflects a much higher sales price of $499,000 with 100% financing from the lender. The HUD-1 settlement statement also reflect the payoff of a non existent mortgage or lien for more than $100,000. This money represents the proceeds of the fraud scheme. Also the deal includes an over-inflated value in the appraisal, a false ernest money deposit letters generated by the title company and straw buyers being used as the buyers in these transactions. Somtimes, the straw buyer is being paid a fee for the use of their credit. In a down market, fraudsters are becoming more and more inventive in their way to defraud lenders and title insurers. It is only after the loan goes into default that someone else has to take the fall for their bad lending decisions. If you recognize this type of scam stay away from it. In most cases it is fraud. It is best to find a reputable local realtor when buying or selling a home that will ensure you a closing which is legitimate and carefree.