I am involved in an almost identical deal.

The credit history report had the following for fraud indicators.

The potential area of concern is fraud.

So the 26-year-old single mom of three works on the side for cash and ends up with housing nicer than any of her peers that work full-time jobs while laying on her back and getting pregnant with child #4 but the elderly woman that is incapable of working has to live in poverty.I worked for Dept of Family Services for 18 months and saw ridiculous amounts of fraud, waste, and abuse.

In addition, undisclosed rebates (not on HUD) can be viewed as loan fraud, because an adjustment to the purchase price also changes the LTV you are getting from the lender changing the ris profile of the loan.

That's a mighty big accusation and I'd be careful about making it.Finally, the Statute of Frauds states that all offers for real estate must be in writing. 

Entering into a contract like a P&S without both the intent and ability to fulfill the obligations therein is a tort known as "fraud in the inducement".  

That is mortgage fraud and you posted it on a publicly searchable forum.No it is illegal and it is easy to follow with insurance.

@Brian R.Mayof you clients are concerned about fraud (i.e., ponzi schemes) as IRAs and 401k plans have always been targeted by fraudsters because retirement accounts are long-term saving vehicles, so many investors fall prey into thinking their investment is growing based on a paper statement.See the following: https://www.sec.gov/news/pressrelease/2015-121.htmlhttps://www.sec.gov/News/PressRelease/Detail/PressRelease/1370539791027https://www.sec.gov/news/press/2010/2010-33.htm

If they're not, the seller has committed perjury and could be subject to damages under fraud statutes.