In failing to disclose National Capital Solutions’ purchase price, is there any kind of loan fraud in connection with the end buyer’s (“C”) lender?
There are times when an escrow or title company might insist that the seller or National Capital Solutions needs to disclose the sale price of the A-to-B transaction to the lender of the B-to-C transaction, or to “C.” National Capital Solutions prefers not to provide this information because it can confuse and delay the transaction. Escrow’s or title’s concern is presumably with the difference in value of the two purchases and the fear that failing to make the disclosure is withholding a material fact from the lender. The author disagrees with this on two points. First, each transaction is a standalone transaction with two complete, independent escrows. As such, financial privacy laws prohibit title or escrow from revealing the terms of the first escrow to an unrelated third party (in this case, “C” or “C’s” lender). Secondly, each sale involves entirely different circumstances, so the first value is not relevant to the second. The first sale is a distressed sale by a homeowner who is
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