Legal Question in Real Estate Law in Iowa

side agreement on property legal?

I live in Iowa and bought a house with my husband through the USDA. We were told that the house was only worth 92500 but the owner/real estate agent wanted 3000 more than that so my hubby made a side agreement to pay the 3000 to her on the side of the agreement with USDA....is this legal? Could hubby go to jail for this? Could we lose the house? I am not on the paper nor did I sign it. I have a notarized copy of the agreement where it acknowledges it as a 2nd mortgage for the property.


Asked on 1/01/08, 5:16 pm

1 Answer from Attorneys
Thomas Moens Moens Law Offices, Chartered

Re: side agreement on property legal?

From the facts you provide, I would guess that the settlement statement everyone signed at closing showed one amount, and without the lender's knowledge, there was an agreement for a different amount. If that is the case, it would probably be considered mortgage fraud, which is quite illegal. It is very unlikely that your husband would go to jail, particularly if he "fessed up" to the proper authorities, however, the penalties are very severe for mortgage fraud. The real estate agent should lose his license, and I would be happy to give you some contacts to make sure that gets done.

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Answered on 1/03/08, 3:46 pm


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