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In the residential world, you are correct. However, in commercial finance, there is nothing wrong with seller financing. It is very common and actually provides a sense of security to the 1st lien holder. The train of thought is, if the seller is willing to stick around, they must have faith in the buyer and the overall transaction. The Fed doesn't care and no one looks at it as a "game." Seller financing is a very valuable tool in the world of commerical real estate financing.I would avoid doing anything outside of escrow (like a "silent second"). Its legally risky and in this day and age with all the foreclosures, the Fed is not likely to take kindly to people who play these sorts of games.
Adam,The lender was willing to provide financing at 60% LTV. However only 10% was available for a down payment. We requested that the seller provide financing in the amount of 30% of the purchase price. This was an easy solution to the problem. Lender LTV requirements were met and a reasonable return was provided to the seller.
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