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Wednesday, February 13, 2013

Buyers Learn How to Avoid Disclosing Inspection Issues to Lenders

[Published Feb. 14, 2013, in the Denver Post and in five Jefferson County weekly newspapers]

Effective this year, buyers are required to submit any inspection resolution to their lender, which has the potential of raising red flags with mortgage underwriters.

Let’s say, for example, that mold was discovered during inspection and the buyer demands mitigation. Seller offers to resolve the issue by providing a monetary concession equal to the cost of mitigation. But mold is a huge red flag for lenders. The solution: Buyer withdraws his inspection objection and the parties sign an amend/extend for a concession equal to the mitigation cost. But might this approach not subject the buyer (and agent) to a charge of mortgage fraud?

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