Legit 100% Financing?

[Nathan Cao]

Hello, I'm pretty new to REI and i've been looking for creative financing to save as much cash as i can. Last week i was referred to a Mortgage Company by a Hard Money Lender. And it turned out they're offering 100% financing and possibly extra money for rehabs.

It took the mortgage officer a while to try and explain this whole process. Here is how it structures/works:

Actual Purchasing Price: $30,000 (Seller gets paid this amount)
Inflated Purchasing Price $36,000 (This is the amount the lender will lend)

The trick is that I will sell the seller a package of "Home Discount Products"
and I will get 16% commission which is $5760. I will then use this amount to pay 10% down payment ($3600). The rest of the left over money I will pay toward closing costs ($2160). In this case, If i use 20% commission, I can take some of the left over money for rehabs.

A few rules:
1) Commission % cannot exceed 20%.
2) Appraisal Value of the house must be equal or higher than the "Inflated Purchasing Price".

Further clarification, this Home Discount Products is a company set up by the founder of this Mortgage company as a dummy company that works solely for this creative financing purpose. Another thing is that at the end of the year i will get a tax form from this company where i would pay 15% of the total commissions i made :(.

Infos on the Mortgage company:
Phoenix Mortgage Group LLC
http://www.phoenixmtg.com/
Their commercial lending company is
http://www.wepinc.biz/

I've heard of mortgage fraud and i have a few doubts about this company.
I'd like to hear some professional opinions on this. Thank You

-Nathan