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A LENDER ASKED ME TO LIE!

By
Services for Real Estate Pros with Classic Property Management of Santa Clarita

Yup, it happened. I had a lender, whose rental properties we manage, call and ask me to tell a little, white lie to make a deal go through. I have always prided myself on being very BLACK AND WHITE when it comes to telling lies. I never thought there would even be a question.

SO, I WOULD LIKE TO TELL YOU WHAT HAPPENED.

This owner owns 8 rental properties. We manage 4 of them. Those 4 pay us the rent, we take our fees and then write him a check. It creates a very good paper trail.

He is trying to get a renter in one of the OTHER properties a loan to buy a house. The lender, obviously, wants a VOR (verification of rent). They want it in one of two ways: 1) canceled checks or 2) a letter from a property manager. Turns out he doesn't have canceled checks.

So, he asks me to write a letter saying that she pays on time and pays $2400/mo. in rent and has rented for the last 24 months. So, I do. I write a letter that says, "We manage four properties for Mr. Owner. This is not one of them. However, Mr. Owner has assured me that the tenant has been there for 24 months and paid $2400/mo. on-time." Needless to say, that is not what they wanted.

So, they sent me their VOR form to fill out and fax back. It was very generic. I filled it out, the things I did know, and sent it back. Of course, it still wasn't enough info for them. So, they called. They wanted to verify over the phone the particulars. When they got to whether or not she had ever paid more than 30 days late, I told them that "I did not manage that property but only served as an advisor for him on that property."

The underwriter calls back, again, and wants to verify that we manage all 8 properties and that all 8 renters pay us and then we write one big check to Mr. Owner. "Sorry, can't verify that.", I say. "Well," she says, "that is what he said." (I really wanted to say, "No, that's what SHE said!" She probably doesn't watch THE OFFICE.)

LATER, I GET A CALL FROM MR. Owner: "John, do what you can, bro."

I did.

Posted by

John Evarts

CEO, Classic Real Estate Management, Inc. 

john@rentwithclassic.com

www.rentwithclassic.com

www.santaclaritapropertymanagement.com

John Evarts
Classic Property Management of Santa Clarita - Santa Clarita, CA

My wife says that is the look I give her when I am acknowledging that she said something but don't know what she said!

Again, thanks for the encouragement. Doing right is good enough by itself, but having people tell you that you did right feels good, too.

Jun 22, 2007 03:40 AM
John Evarts
Classic Property Management of Santa Clarita - Santa Clarita, CA
Lenn, that is crazy! The almighty dollar does bad things to people sometimes. It is nice to know people that don't make business decisions based solely on profits but also take integrity into account. Sorry that is going on in your office.
Jun 22, 2007 03:45 AM
Carol Smith
Casmi Photography - Mebane, NC
No deal, client or business is worth giving up your self respect and integrity.  Kudos to you for not going along with this.  I congratulate you on your character. 
Jun 22, 2007 07:19 AM
Mother Lode
Real Living Sugar Pine Realty - Sonora, CA
Real Estate Master
There will always be the "benders of truth." It's great to see your ethics stood the test.
Jun 22, 2007 08:10 AM
Adrian Alvarado
MGR Real Estate Inc. - Ontario, CA
Inland Empire Real Estate

One mistake can definetly cost you your job and your respect from others. With so much of this going on it  is great to see that there are still good honest people who will not bend over pressure from others. This really sums up the whole sub-prime market disaster a little lie goes a very long way usually ending up in default and foreclosure.

Jun 22, 2007 08:32 AM
John Evarts
Classic Property Management of Santa Clarita - Santa Clarita, CA

Carol, I agree. Thanks for the kudos.

Mother Lode Master, there are great benders of the truth and some of them are great salesmen! (and women)

Adrian, unfortunately you are correct. I know some mortgage brokers who think that "the bank understands that rules are broken, but there are rules to breaking rules".

Jun 22, 2007 09:30 AM
Ryan Morrow
Sierra Pacific Mortgage Company - Palmdale, CA
Ryan Morrow Branch Manager Sierra Pacific Mortgage

You filled out what you could, if that does not work then the client does not qualify. Guidelines are in place to be used to qualify, not give us direction to bend the rules. This is the same reason many cleints have been given loans for homes they can not actually afford with their REAL income.

 Good Job! staying honest will payoff 10fold.

Jun 22, 2007 12:52 PM
John Evarts
Classic Property Management of Santa Clarita - Santa Clarita, CA
Ryan, thanks for the encouragement. Its great to see, just from this post, how many people feel the same !
Jun 22, 2007 12:56 PM
Steven Shewell
Primary Residential Mortgage, Inc. - Ephrata, PA
The Mortgage Maverick
Way to stay true to your professionalism.  Too many agents, trying to placate their clients, will say almost anything.
Jun 22, 2007 02:05 PM
"The Lovely Wife" The One And Only TLW.
President-Tutas Towne Realty, Inc. - Kissimmee, FL

John...

...And once we give up that integrity it is almost impossible to get it back. Give up...As in choice :)

P.S. I am adding to Blog Boy's (Broker Bryant) comment :)

TLW...ROAR!

Jun 30, 2007 05:26 AM
John Evarts
Classic Property Management of Santa Clarita - Santa Clarita, CA
TLW, true true. Fortunately, I was lucky to be surrounded by good role models.
Jun 30, 2007 06:03 AM
Christina Ethridge
The North Idaho Dream Team powered by SKE Realty Group - Coeur d'Alene, ID
I shouldn't be, but I am daily amazed at the stunts people pull.
Jul 07, 2007 04:45 AM
John Evarts
Classic Property Management of Santa Clarita - Santa Clarita, CA
Christina, no doubt. I think that we will continually be amazed.
Jul 07, 2007 06:43 AM
Ray Perry
CENTURY 21 The Neil Company Real Estate - Roseburg, OR
Realtor, CRS, GRI, e-PRO

John:

Good work!  I'd let you manage my property anytime.

Jul 07, 2007 10:53 AM
John Evarts
Classic Property Management of Santa Clarita - Santa Clarita, CA
Ray, I may take you up that. We are going to be expanding in the next 2 years.
Jul 07, 2007 11:00 AM
New Tampa Property Management
Rent New Tampa, Inc. - Tampa, FL

John: Curious as to why you are not managing all 8 properties... after this situation, you seem to be in a good spot to get the other 4 properties, this way next time, you CAN provide the information necessary. If those properties are not in a proximity where you can manage them, maybe now would be a good time to get him someone closer to those properties.

 

Jul 16, 2007 03:59 PM
John Evarts
Classic Property Management of Santa Clarita - Santa Clarita, CA
Rob, I wish we were. I think he felt like they were good tenants and didn't require us managing. the properties we manage for him we picked up when they were vacant. We will probably get his other ones when they go vacant.
Jul 17, 2007 03:22 AM
Todd Clark - Retired
eXp Realty LLC - Tigard, OR
Principle Broker Oregon

Good for you not getting yourself involved in mortgage fraud. It just isn't worth your lic.

Aug 09, 2007 06:26 PM
Donna Yates
BHGRE - Metro Brokers - Blue Ridge, GA
Blue Ridge Mountains
Keep it between the ditches!  Lenders lying, imagine that!  Losing your license over mortgage fraud is nothing; what about a felony and prison term!
Aug 09, 2007 07:01 PM
John Evarts
Classic Property Management of Santa Clarita - Santa Clarita, CA

Todd, I couldn't agree more. Thanks for stopping by.

Donna, it wasn't that is was surprising that a lender lied, it was just that it hadn't yet heppened to me. You know what I mean?

Aug 10, 2007 06:40 AM