The only way for those sorts of schemes to work is for the buyer to overpay for house, then the seller rebates part of the proceeds to the buyer. The buyer then walks leaving the lender holding the bag.

The sum needs to be big enough to motivate the buyer to commit mortgage fraud. It’s mostly the buyer and the appraiser since the seller can more easily plead ignorance.

You have to look at this in terms of motivation. The most the seller can loose is his 200k equity. He could just lower the price by $100k or even $200k for a quick sale. The reason he’s facing foreclosure is because he trying to get out whole. In the seller’s mind, he needs that 200k back to start over somewhere else.

I’m afraid that your cash back proposal won’t go anywhere unless to offer to over-pay for the house.