Buyers Account
Your Earned Income Program
Down Payment Assistance
Our Independent Dealers earn a commission and can use that how ever they wish. Often, they use it as the down payment on their dream home. Home loans are hard to get now days but with our down payment assistance that dream can become a reality.
"zero down payment"
"no down payment"
These terms are disappearing fast. Don't let the current state of the mortgage industry stop you from home ownership.
"zero down payment"
"no down payment"
These terms are disappearing fast. Don't let the current state of the mortgage industry stop you from home ownership.
On determining the proper classification of the commission paid to the Independent Dealer"
The commission paid to the Independent Dealer for services rendered in the sale of memberships to the Owners Alliance is properly defined as "Earned Income" as currently defined by the US Internal Revenue Service.
In the past, present and predictable future the Federal and State Supreme Courts have rejected narrow and strict definitions of "Income" in favor of a more broad interpretation of the term. In Rickel v. Commissioner, 900 F.2d 655, 657 (3d Cir.1990); and United States v. Connor, 898 F.2d 942, 943 (3d Cir.), cert. denied, 497 U.S. 1029, 110 S.Ct 3284, 111 L.Ed.2d 793 (1990), as well as numerous other courts of Appeals have uniformly upheld a broad definition of "income." See; Commissioner v. Miller, 914 F.2d 586, 590 (4th Cir.1990) ( "Exclusions to income are to be construed narrowly."); Herbert v. United States, 850 F.2d 32, 34 (2d Cir.1988) ("The Supreme Court has consistently given this definition of gross income a liberal construction in recognition of the intention of Congress to tax all gains except those specifically exempted."); In re Carmel, 134 B.R. 890, 896 Bankr.N.D.Ill.1991) ("This broad definition [of income] operates to tax all gains except those specifically excluded by statute."); In re Osborne, 159 B.R. 570 (Bankr.C.D.Cal.1993), aff'd 167 B.R. 6998 (9th Cir. BAP 1994).
The present IRC, the definition of income is very broad, e.g., [except] as otherwise provided…., gross income means all income from whatever source derived, including (but not limited to) the following items:
Simply put; The definition of the commission paid to the Independent Dealer is correctly defined as "Earned Income." Earned Income is always allowed without seasoning when used for a down payment.
The Buyers Account, program does not violate RESPA because the sale of the membership is not related to settlement services of the real estate transaction and the commission is reasonable consideration for the sale of the membership.
RESPA was enacted by congress after seeing a significant need of reforms in the residential real-estate settlement process. 4 key items were. 12 U.S.C §2601.
In order to prohibit kickback and referral fee arrangements RESPA's "fee-splitting" provision was created. This provision prohibits any payment that is made or thing of value that is furnished for referral of real estate settlement business, and to prohibit a person that provides settlement services from giving or rebating any portion of a charge to any other person except in return for services actually performed. Welch v. Centex Home Equity Co., LLC, 262 F.Supp.2d 1263
Pursuant to RESPA "the term "settlement services" includes any service provided in connection with a real estate settlement including, but not limited to, the following: title searches, title examinations, the provision of title certificates, title insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of credit reports or appraisals, pest and fungus inspections, services rendered by a real estate agent or broker, the originator of a federally related mortgage loan (including, but not limited to, the taking of loan application, loan processing, and the underwriting and funding of loans), and the handling of the processing, and closing or settlement." 12 U.S.C §2602(3).
RESPA does not prohibit the payment of a reasonable fee for services actually performed. The services provided by Buyers Account, is independent of the real estate transaction and does not constitute "Settlement Services" as defined by RESPA.
Simply put; the Buyers Account program does not violate RESPA because all fees charged are equitable and reasonable in an open market economy.
Income from Part-Time Employment can not be discounted or excluded by lenders under the Equal Credit Opportunity Act.
The use of a "Earned Income" commission for a down payment is consistent with the Equal Credit Opportunity Act. Under the Equal Credit Opportunity Act, 15 USCA § 1691, a lender my consider the amount and probable continuance of any income, but may not discount or exclude from consideration income from part-time employment. It was found in the case of U.S. v. Household Finance Corp., 1988 Wl 893886 (N.D.Ill. 1988), the United States District Court prohibited "discounting or excluding from consideration income from part-time employment except as provided by the ECOA and Regulation B, 12 CFR §202.6(b)(5)".
Rules of that regulation regarding the evaluation of applications state:
(b) Specific rules concerning the use of information. (1) Except as provided in the Act and this regulation, a creditor shall not take a prohibited basis into account in any system of evaluating the credit worthiness of applicants.
(5) Income. A creditor shall not discount or exclude from consideration the income of an applicant or the spouse of an applicant because of a prohibited basis or because the income is derived from part-time employment or is an annuity, pension, or other retirement benefit; a creditor may consider the amount and probable continuance of any income in evaluating an applicant's credit worthiness. When an applicant relies on alimony, child support or separate maintenance payments in applying for credit, the creditor shall consider such payments as income to the extent that they are likely to be consistently made.
Simply put; When applying this provision to the Buyers Account system, the use of an "Earned Income" commission for a down payment is acceptable under the Equal Credit Opportunity Act.
In the past, present and predictable future the Federal and State Supreme Courts have rejected narrow and strict definitions of "Income" in favor of a more broad interpretation of the term. In Rickel v. Commissioner, 900 F.2d 655, 657 (3d Cir.1990); and United States v. Connor, 898 F.2d 942, 943 (3d Cir.), cert. denied, 497 U.S. 1029, 110 S.Ct 3284, 111 L.Ed.2d 793 (1990), as well as numerous other courts of Appeals have uniformly upheld a broad definition of "income." See; Commissioner v. Miller, 914 F.2d 586, 590 (4th Cir.1990) ( "Exclusions to income are to be construed narrowly."); Herbert v. United States, 850 F.2d 32, 34 (2d Cir.1988) ("The Supreme Court has consistently given this definition of gross income a liberal construction in recognition of the intention of Congress to tax all gains except those specifically exempted."); In re Carmel, 134 B.R. 890, 896 Bankr.N.D.Ill.1991) ("This broad definition [of income] operates to tax all gains except those specifically excluded by statute."); In re Osborne, 159 B.R. 570 (Bankr.C.D.Cal.1993), aff'd 167 B.R. 6998 (9th Cir. BAP 1994).
The present IRC, the definition of income is very broad, e.g., [except] as otherwise provided…., gross income means all income from whatever source derived, including (but not limited to) the following items:
- Compensation for services, including fees, commissions, fringe benefits, and similar items.
- Gross income derived from business.
Simply put; The definition of the commission paid to the Independent Dealer is correctly defined as "Earned Income." Earned Income is always allowed without seasoning when used for a down payment.
On Determining if the Buyers Account program violates the Real Estate Settlement Procedures Act (RESPA)
The Buyers Account, program does not violate RESPA because the sale of the membership is not related to settlement services of the real estate transaction and the commission is reasonable consideration for the sale of the membership.
RESPA was enacted by congress after seeing a significant need of reforms in the residential real-estate settlement process. 4 key items were. 12 U.S.C §2601.
- To bring about more effective advance disclosure of
settlement costs to home
buyers and sellers.
- To eliminate kickbacks and referral fees that tended
to in crease the cost of
settlement services.
- To reduce sums that home buyers were required, by
lenders, to place in escrow
accounts to insure payment of real estate taxes and insurance.
- To significantly reform and modernize local record keeping of land title information.
In order to prohibit kickback and referral fee arrangements RESPA's "fee-splitting" provision was created. This provision prohibits any payment that is made or thing of value that is furnished for referral of real estate settlement business, and to prohibit a person that provides settlement services from giving or rebating any portion of a charge to any other person except in return for services actually performed. Welch v. Centex Home Equity Co., LLC, 262 F.Supp.2d 1263
Pursuant to RESPA "the term "settlement services" includes any service provided in connection with a real estate settlement including, but not limited to, the following: title searches, title examinations, the provision of title certificates, title insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of credit reports or appraisals, pest and fungus inspections, services rendered by a real estate agent or broker, the originator of a federally related mortgage loan (including, but not limited to, the taking of loan application, loan processing, and the underwriting and funding of loans), and the handling of the processing, and closing or settlement." 12 U.S.C §2602(3).
RESPA does not prohibit the payment of a reasonable fee for services actually performed. The services provided by Buyers Account, is independent of the real estate transaction and does not constitute "Settlement Services" as defined by RESPA.
Simply put; the Buyers Account program does not violate RESPA because all fees charged are equitable and reasonable in an open market economy.
On Determining the lenders ability to exclude the "Earned Income" commission as a proper source of funds for a down payment.
Income from Part-Time Employment can not be discounted or excluded by lenders under the Equal Credit Opportunity Act.
The use of a "Earned Income" commission for a down payment is consistent with the Equal Credit Opportunity Act. Under the Equal Credit Opportunity Act, 15 USCA § 1691, a lender my consider the amount and probable continuance of any income, but may not discount or exclude from consideration income from part-time employment. It was found in the case of U.S. v. Household Finance Corp., 1988 Wl 893886 (N.D.Ill. 1988), the United States District Court prohibited "discounting or excluding from consideration income from part-time employment except as provided by the ECOA and Regulation B, 12 CFR §202.6(b)(5)".
Rules of that regulation regarding the evaluation of applications state:
(b) Specific rules concerning the use of information. (1) Except as provided in the Act and this regulation, a creditor shall not take a prohibited basis into account in any system of evaluating the credit worthiness of applicants.
(5) Income. A creditor shall not discount or exclude from consideration the income of an applicant or the spouse of an applicant because of a prohibited basis or because the income is derived from part-time employment or is an annuity, pension, or other retirement benefit; a creditor may consider the amount and probable continuance of any income in evaluating an applicant's credit worthiness. When an applicant relies on alimony, child support or separate maintenance payments in applying for credit, the creditor shall consider such payments as income to the extent that they are likely to be consistently made.
Simply put; When applying this provision to the Buyers Account system, the use of an "Earned Income" commission for a down payment is acceptable under the Equal Credit Opportunity Act.
On determining if the Buyers Account program commits Mortgage Fraud
The Buyers Account program does not commit mortgage fraud because there are NO knowingly false statements being made for the purpose of obtaining a mortgage.
18 U.S.C. §1010. Department of Housing and Urban Development and Federal Housing Administration transactions, provides that:
"Whoever, for the purpose of obtaining any loan or advance of credit from any person, partnership, association, or corporation with the intent that such loan or advance of credit shall be offered to or accepted by the Department of housing and Urban Development for insurance, or for the purpose of obtaining any extension or renewal of any loan, advance of credit, or mortgage insured by such Department, or the acceptance, release, or substitution of any security on such a loan, advance of credit, or for the purpose of influencing in any way the action of such Department, makes, passes, utters, or publishes any statement, knowing the same to be false, or alters, forges, or counterfeits any instrument, paper, or document, or utters, publishes, or passes as true any instrument, paper, or document, knowing it to have been altered, forged, or counterfeited, or willfully over values any security, asset or income, shall be fined under this title or imprisoned not more than two years or both."
Three elements of proof are required to substantiate the offense of making a false statement in application for a Federal Housing Administration Loan.
The Buyers Account program does not involve any of those three required elements. In Fact, the Buyers Account program goes above and beyond the requirements for proving it is legal by the following:
18 U.S.C. §1010. Department of Housing and Urban Development and Federal Housing Administration transactions, provides that:
"Whoever, for the purpose of obtaining any loan or advance of credit from any person, partnership, association, or corporation with the intent that such loan or advance of credit shall be offered to or accepted by the Department of housing and Urban Development for insurance, or for the purpose of obtaining any extension or renewal of any loan, advance of credit, or mortgage insured by such Department, or the acceptance, release, or substitution of any security on such a loan, advance of credit, or for the purpose of influencing in any way the action of such Department, makes, passes, utters, or publishes any statement, knowing the same to be false, or alters, forges, or counterfeits any instrument, paper, or document, or utters, publishes, or passes as true any instrument, paper, or document, knowing it to have been altered, forged, or counterfeited, or willfully over values any security, asset or income, shall be fined under this title or imprisoned not more than two years or both."
Three elements of proof are required to substantiate the offense of making a false statement in application for a Federal Housing Administration Loan.
- Making of a false statement in application.
- Knowing it to be false.
- For purpose of obtaining loan from lending institution and influencing Administration.
The Buyers Account program does not involve any of those three required elements. In Fact, the Buyers Account program goes above and beyond the requirements for proving it is legal by the following:
- The property value as defined by the 3rd party appraisal is never exceeded.
- The home buyer properly provides his primary and part-time employment information on the loan application.
- The home buyer correctly identifies the source of his down payment.
- The home seller purchases the membership in a transaction separate from the real estate sale.
- All information regarding the program, membership and payments are fully disclosed to all parties.
- All U.S. laws regarding taxing of individual income are complied with.