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Just to add to this, I asked someone who knows about this sort of stuff to take a look at your post, and here's his reply:

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Actually, the IRS would consider the payment to him income and taxable. It doesn't matter how you or your partner characterize it. Moreover, there may be closing costs (title insurance, settlement and recording fees and taxes) each time a mortgage is made. If it's an "all-in" mortgage (one where settlement costs are paid by the lender), there's usually some time limit--like one year or more--before the loan can be paid in full. Moreover, this would probably be considered a fraud on the mortgage broker's (that's the recipient of the YSP) part against his loan purchasers. If caught this poster could well be implicated.



Hm. That's interesting about the rebate being taxable. He definitely doesn't issue 1099s. Regarding the closing costs, he says that he pays those out of his YSP.

He says that he follows Fannie Mae rules...

He gave me several referral names and numbers. I spoke to a medical doctor in Palo Alto and a CPA in San Francisco that swear by this guy and his service. They say that they've saved a ton of money using the service. They both said that the risk was if interest rates were to climb like they did under Jimmy Carter, that he'd no longer be able to offer these kinds of deals...

I'm surprised that the loans can be paid off after 4 months after they've paid such a big kickback to the broker.

Dignan, I wonder if I could have your guy call my guy so that they could discuss...

- Jon