A cash-back transaction scenario is where a buy pays more than a home is worth with the extra money being paid from the seller (outside of escrow) back to the buyer
Wikipedia defines Mortgage Fraud Cash-Back Schemes:
"The buyer and seller or the buyer and real estate agent collude to deceive the lender as to the true sale price of a property. The seller or the real estate agent gives the buyer a cash rebate which is not disclosed to the lender. As a result the lender lends too much, and the buyer and/or seller pocket the overage. This scheme usually requires appraisal fraud to deceive the lender. "Get Rich Quick" real-estate gurus' courses frequently rely heavily on this mechanism for profitability"
The Land ‘Gold-rush' in Phoenix of the last 10 years saw the unfortunate proliferation of many unscrupulous brokers , appraisers, mortgage brokers, buyers and sellers who participated in cash-back schemes which hurt the honest majority and contributed to the large amount of foreclosures in metro Phoenix and many of the surrounding towns including Scottsdale, Tempe, Peoria, Gilbert, etc...
If you are approached with such a cash back deal or know of participants email: px_cashback@ic.fbi.giv
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