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You want my Sellers to do what?

Hi folks! Well, today, I received another of those fraudulent offers for one of my listings. Do you get as tired as I do of getting these things? It really leaves a bad taste in my mouth for our profession. When folks hire a REALTOR® they should be assured that they will not be participating in mortgage fraud. Mortgage fraud is a disgrace to our industry and it makes me mad.

A REALTOR®, called me yesterday, to let me know she was sending over an offer. She gave me a heads up that the offer was written with the Buyer needing a "gift of equity" from the Seller. Gift of equity? What the hell is that? Anyway, I told her to send it on over and I would take a look at it. My curiosity always gets the best of me and I get excited about seeing the new "fraud du jour" technique. I figure, if nothing else, it's good blog fodder. So keep them coming!

Well this one was a doozie!!! Here are the details: My listing is priced at $149,000. The offer was for $165,000 on a FHA loan with the Seller "gifting" through a non profit "church" $30,000 to the Buyer to be used for down payment, closing costs and to pay off some credit judgments. There was an added addendum stating that the "real" purchase price was $135,000 and the commission would be paid on that amount. Is that beautiful or what?

The Mortgage Broker called me to explain all this to me and to let me know I also needed to go into the MLS and raise the list price to $165,000 so it would not affect the appraisal. BUT this is no big deal because they do this ALL the time. Well being the good little Broker that I am, I told the MB and the REALTOR® that I had submitted the offer to my "Fraud Compliance Company" for review and as soon as I heard back from them I would get back with them. You think they were getting nervous yet?

If that wasn't enough, I sent this Email over a little later:

******************************************************************************************

The offer that you have presented for XXX Bluewood Dr has been rejected out right.

As mentioned to you earlier, this offer was presented to my Fraud Compliance Department for review and has been rejected as an attempt at committing Mortgage Fraud as per the HUD and FHA guidelines. I will assume that you are not aware of this and I will not report it to the proper authorities, this time. However, if I see any offers of this sort in the future from your office I will report it to the Attorney General, FREC and the FBI. Mortgage Fraud is a federal offense. By participating in this you are jeopardizing your license and your freedom.

There are numerous red flags in this purchase offer and as a licensed professional you should know that. If you are doing deals like this you need to stop. Mortgage Fraud is a disease in our industry and it destroys lives. This contract is not in a "grey" area. It is an attempt at fraud, whether knowingly or unknowingly. My Fraud Compliance Officer is one of the leading experts on Mortgage Fraud in the country. At a minimum:

The FHA does allow down payment assistance from a 3rd party entity. BUT they will not allow an exorbitant amount of $30,000(18%) This is fraud.

Requiring me to change the MLS list price for appraisal purposes, is fraud.

Having an addendum to the contract with a different purchase price on it, is fraud.

Here is a link to the FHA guidelines for you.

FHA Guidelines Sec. 3 relates to this.

My suggestion is you distance yourself from this lender. You also need to get education related to fraud and learn how to recognize it. Please accept this email as a professional courtesy and a wake up call. I have forwarded this to the lender but have not forwarded it to your Broker, yet. This is a serious matter and should be handled accordingly.

******************************************************************************************

Man, I LOVE my job!!!! How did I do?

Posted by Bryant Tutas Broker/REALTOR(R) Tutas Towne Realty, Inc on 07/11/2007 07:00 PM

Comments (129)

mortgage fraud, educational

129 Comments on You want my Sellers to do what?

JUL

2007

Reserved Parking For "The Lovely Wife"...TLW...ROAR!

Blog Boy...

After hearing about this all day...I'd say ya done good.

However I still think you should have copied that email over to the Broker.

But...What the hell do I know I'm just the wife of a Blog Boy :)

TLW...ROAR!

WOW,

The scary thing is this IS happening. I can't believe people actually fall for this crap. Great Post!

I will most definitely follow your lead....I like to sleep well at night.

I'd report them (lender) right away. They ought to be stopped...sadly there is so much of this stuff going on! You did great BB I hope the agent learns from you!

Hey Bryant,

All I have to say is holy s***, They are really getting desperate out there, I wouldn't want to touch that with any part of my soul. Matt Blum wrote a post yesterday about something just like this, anyway I think naturally you are smart not to deal with this, but man we have these people out there still doing this, it makes me nervous just hearing it...

Great post, about ignorance :0)

Tom Weiss

Uh Oh, sounds like the Fools have moved up your way BB.... Saw lots and lots of that stuff here several months ago, but our area is so full of Feds now, I guess they decided to move a bit North.

I like the part about sending it to the Fraud Compliance people...

Bryant,

I bookmarked this post for future reference (if I need to send an email to another agent).

Thanks for being vigiliant,

Fran

Bryant--It would be hilarious to work in your market...Loved TLW's comment about 'hearing about this all day" I can just see you waiting for the fax...with your wheels turning...coming up with something good to say...And thinking "I can't wait to post about this one!!" Did I get the scenario right?!! Very funny post...Not so funny topic!

BB - I LOVE your Fraud Compliance Department - and your letter of response. However, I would also send it to the agent's broker, and to your Board of Realtors, and to the FBI. Fraud like this isn't an accident! And if it is - they can tell it to the judge.

What you did was the right thing to do. Mortgage fraud is a problem that effects all of us. People who want to play ball by the rules in the Subprime market with less than perfect credit get hurt the most because their programs are being abolished. FHA fraud is very big all over. Thanks for doing the right thing. Katerina

I also think that this should have been reported to the law enforcement agencies. This is no accident. You cant expect a professional to "not know"

Teri, You DID get it right!!! I love a little excitement in my boring life. Funny I haven't received a response to my "counter offer" yet:)

Fran, Please feel free to use this email. I know I've saved it. I'm sure it will get lots of use.

Jay, The fools have been in my market forever. But they are really starting to come out of the wood work now. Desperate measures for desperate times. It should be an interesting summer.

Tom, Are you saying you wouldn't do this loan. Come on man it's helping people realize home ownership. Aren't you an American?:)

Monika, I did send this email to the Lender. It may get sent elsewhere tomorrow depending on what kind of a response I get.

WooHoo, do they do this crap in Hawaii?

Jonathan, Fraud is rampant in my area. The sad thing is that there are a whole bu8nch of REALTORS(R) that don't know it's fraud. They think that since the MB says it's OK that it is. That's the biggest issue. Lack of knowledge in our profession.

Hey Hun, Do you like this one? Seems like very offer I get is food for my blog.

Good for you! I wouldn't hesitate to report to the Broker and the authorities...jeesh. Did you get a response back? Um....I didn't know.

Boy it takes all kinds, I sure hope this was a wake up call for that agent and that the lender stops doing this. They are part of the problem of why the market is so messed up now.

Sharon, I made up "Fraud Compliance Department" off the top of my head when talking with the MB. It felt great saying it!!!!! BTW I did seek several professional opinions. Not that I needed them but wouldn't want to be a fibber.

Katerina, And the only way to stop it is for the folks in the filed(us) to just say know. Also, we have to educate our peers.

Raj, I actually sought advice on that and was informed that everyone is so backed up with fraud reports that it is useless unless it's after the fact. Once the properties get foreclosed on and the lenders are eating a chunk of change and make a stink, that's when the FBI steps in.

Very good post! Thanks for the heads up! I actually heard of an unuasually high offer coming into my office recently and it made me wonder if the Realtor representing the seller ever thought it could be something like this. I e-mailed him your posting. Keep good info like that coming!

OK Rebecca and Linda, I can tell already I'm not going to be able to keep up with the comments. BUT as always I appreciate each and every one that takes the time to read and comment.

See what I mean? There's Lorrie sneaking in on me:)

Yeah Bryant,

I am an American who wouldn't do real good with some big guy's in jail, there ain't no smile on my face when I think about that.:0( There's a funny picture of Matt Blum wearing an orange jumpsuit on his post That Lousy Mortgage broker, it's all his fault..and even he would agree, this ain't good!!! Thanks for the laugh and Hell No I wouldn't do this deal:0)

Take care BB,

Tom Weiss

Super Agent

MY HERO ! ! !

Thesa...

You got that right :)

Blog Boy...

Love it. Hard core "Real Estate"...SVW.

TLW...ROAR!

You did great, I am so tired of seeing this kind of junk all the time it drives me crazy.

A classic case of taking something good (but complicated) like the Ameridream program and bastardizing it into fraud. Will these people ever just practice honest real estate?

JEEZ LOUISE!!!!! I thought I'd hear them all. This is just stunning! I totally hate snitches, but unless this was an agent I knew and loved, I would be tempted to rat her out.

Glad you posted this. I fairly new to real estate, and would not have second guess the offer. I know better now. Thanks

You were way too easy on them. Looks to me like they lived to fight another day !

Bryant, you did good, but then again you usually do. It is amazing what some people will try to pull off, unlike the nonprofit church part.

Bryant - I've never used them but it sounds a little like the nehemiah program. I believe it started as a Church based (Non Profit) organization.

Do a quick Google Search for nehemiah program. It's legitimate.

RESPA says a seller can't contribute directly so I believe (and someone come in here and correct me if I'm wrong) the Church has a pool of money it grants to new homeowners. The Seller donates to the organization and replenishes the pool. So the dollar that the seller gives is NOT the actual dollar that the Church grants.

Does that make sense? Do I have it right?

BB - I assumed you did make up the Fraud Compliance Department - that's why I loved it! On the other hand, who says you made it up? You may be your own Fraud Compliance Department - after all, you're the one who reviewed the contract and determined if it had the earmarks of fraud. Or maybe TLW is the FCD, or maybe you both are....reminds me of when we lived in Newport and our maid was always able to sense when the Property Assessor was calling and would respond, "Well, I wouldn't know when they'd be back...I'm the UPSTAIRS maid. Which wasn't to say she wasn't also the downstairs maid, and the basement maid...well, you get my gist. But that was 30+ years ago in one of out past lives.

Sorry - I posted the above when I was logged out, then logged in, copied it and went to delete the unsigned comment, but couldn't find a way to delete it. Didn't mean to duplicate, just wanted to say it was me.

Bryant, I thought that was just called "creative financing". What's wrong with that:)

LOL @ John Evarts...Good One :)

Can I clone you? I have a very good client of mine who was selling his investment properties.. This is the offer he received.. House appraised at 175K on MLS for 140K . He was told by the "Mortgage Person" to take it off mls.. raise it up to 160K and in good faith deposit 20k into the buyers account so they can show assets and than in the end he would get his money back....I told him to run fast and run far... His title company told him if he would even think of doing that they would not represent him any more deals.. Great to know some good title companies are in Florida....

A very good and informative post. I haven't had any one approach me with an offer like that. It's just amazing to me that this MB wasn't even concerned that they might one day approach the wrong person and be reported. Amazing. (or reeeeally dumb).

Wow, it takes all kinds. By the way, I just developed our own Fraud Compliance Department. It's made up of highly trained and respected associates who meet on a daily bases to discuss these issues. Thanks for the great idea and I will tell the rest of the crew of their new title.

Mike Mueller, The Nehemiah program is a non profit where the Seller IS paying into the program and Nehemiah then "gifts" the money to the buyer. Nehemiah charges the Seller $500 for this service. They work in conjunction with FHA and are a legitimate program. BUT they are limited to 6% of the purchase price. There are several other similar programs. AND FHA does allow a non profit gift BUT trying to gift 18% AND requesting the MLS list price to be changed to reflect the purchase price is fraud through and through.

Here are a few good links:

http://www.fha-home-loans.com/down_payment_assistance_programs_fha_loans.htm

http://www.irs.gov/newsroom/article/0,,id=156675,00.html

http://fha.mortgageloanplace.com/FHA_down_payments.html

BTW, IF YOU HOLD DOWN YOUR SHIFT KEY WHILE CLICKING ON THE LINK IT WILL ENSURE THAT THEY OPEN IN A NEW WINDOW.

Fraud Compliance Department! LOL I love it! I think I need to get me one of those.

Thanks for making this SO clear. I have heard of this many times, but to read of a real life example really helps make it clear. Thanks for a terrifice post. Yes, I have also heard of the Nehmiah Program which some people mention but THIS in not it.

See - ask a question and get an answer! So I was close? Wasn't it started as a Church based Non Profit?

True, 3% or even 6% is a far cry from 18%

From the IRS page:

“The IRS is increasingly concerned with organizations that are taking advantage of homebuyers who need assistance for a down payment to realize the American dream of homeownership,” said IRS Commissioner Mark W. Everson. “So-called charities that manipulate the system do more than mislead honest homebuyers and ultimately jack up the cost of the home. They also damage the image of honest, legitimate charities.”

So are we going to shoot this one too?

Interesting, very interesting...

:::: BB:::: too the rescue.... You done good my friend. I love that crap. I do revel in doing just what you did.... "calling them out on their bull".

I've said it before and I'll say it again... I CAN'T STAND PEOPLE TAKING ADVANTAGE OF PEOPLE OR FLAT OUT LING TO ME ABOUT BUSINESS. GO KNOCK ON SOMEONE ELSE'S DOOR... CAUSE YOU'LL REGRET ME OPENING MINE.

Okay... I think I feel better now... thank you and the public thanks you for policing this idiots.

OK folks, It's almost my bed time. I have appointments all day tomorrow. BUT I truly appreciate your participation in this comment thread. This is a very important issue. I use these real life examples to try and make this issue as clear as possible. There should never be an excuse for us to say "I didn't know".

Mike I know there are out of California but don't know if they started as a church or not. I too thought the IRS article was very interesting. I think FHA just recently modified some of their rules related to these programs as well. They were designed to help folks not burden them with over inflated mortgages for more than their properties are worth.

On another note. I think my Friday video this week will contain a follow up to this post. My mind is spinning already. So stay tuned!! It should be fun:)

Good job Bryant. You really should report them. It's probably a numbers game with them and eventually they'll find willing participants. Lock 'em up and take them off the streets.

WAY to GO! BB!!!!!

Hey BB - I think we cannot read enough posts about this very thing. We've encountered this in my area a little bit. I had an agent I work with come to me with a very similar situation, and because I had read something about this here on AR some time ago, I knew enough to warn him about that possibly being mortage fraud. His response was tha the lender had told him everything was okay. Tomorrow I'm going to show him your post, and perhaps then he'll get what I was trying to tell him.

Thanks for writing this post, and I can't wait to hear about the response, if any, that you get from your lettter.

I like Lenn's drawaing of you as 'Super Agent'!!

Ann

You did GREAT. I've been dealing with cash buyers (selling the old house to scale down to the new home) so haven't been privy to the creative scams that have crept in over the last two years. Thank goodness for this forum- it would be like an unexpected electrical SHOCK! I just don't NEED that again, having been led to the Q&A by...YOU. I'm still recovering!

I agree with your lovely wife.... You should have at least copied the broker on your message (his license is in jeopardy too) and I would MOST DEFINITELY report the lender who "does it all the time".

I would have sent a copy of all documents to the state authorities. I have no tolerance for that kind of person.

You know - as this post goes on and on - I know BB has trottled off to bed (is that a word?) and I can only hope his computer does what mine does and "Dings" with every new email.

Let's keep commenting and keep him awake, eh?

This post needs more ...

Hey BB... You sleeping yet?

Bryant - great post and I think you did it right. It is somehow comforting to me to see that the fraud meisters are making their way north. Just 2 weeks ago mortgage fraud became a crime in Florida - it's about time! I understand now that all local law enforcement agencies are trained to handle cases and make arrests. It's about time. We can now pick up the phone and report a crime in progress - that should get rid of some of the scum, ya think?

Wow, you get the good one, BB. I would report them too. Pretty blatant stuff, and in writing too. How can they refute that or say that was not what they meant? Great evidence.

Pretty clear cut IMO. Love your letter - have saved it in case I need it - hope not.

Thanks for the funny story, but not a funny situation.

Jeff

Where is Ed Rybczynski - He'll love this one.

From Murphys Real Estate Laws:

Creative financing is followed by creative litigation.

As agents, we want no part of it. I love the new department you have added! :)

This post is being forwarded to my "blog compliance department" for review - it's too good to be true. Why don't I get any funny offers to blog about...hmm...maybe that's OK, though.

Bryant,

I am Shocked! I deal mostly with Cash buyers. You reacted quickly and did a wondeful job! I like the "Fraud Compliance Department" that was great!

WOW this is amazing! I deal mostly with cash buyers and the few offers I get with a mortgage always went smoothly, but I have never seen any offer like you did! You did a fantastic job with your response, but I also think the Broker should be notified as well.

Your love for your job definately shines through!! :-) I think you were more than fair in warning them about trying this again!! A Great post and heads up! Thanks Broker B! :-)

LOOK OUT! Broker Bryant has your number . . . Very wonderfully done! (I'm glad I'm not trying to put something past you.)

Now that you've created this new Fraud Compliance Department, are you chairperson? Where do I fax my questionable items too?

You should definitely report them. If not, these predators will hit one of the many newbie agents out there that don't know any better

You do get the most interesting offers :) I tried the link to the HUD stuff for nighttime reading but got an error:

Error #2406 Request not understood. Please contact hudclips@hudclips.org and inform them of the date/time of the error, the domain/site name, the error number, and what you were attempting to do (database, browse or search of which fields). Thanks.

Good post though and a good read.

Being a new Realtor, I come in here to listen to the trends, be they fraudulent or good practices. Thank goodness I read about this before I have someone trying to pull the wool over my eyes!

Lexa Montierth

I smell a rat. It always amazes me what they will try!!

Thanks for your insight on fraud. I really enjoyed your post. Team Patereau had a more subtle kind of fraud show up in the form of an offer on one of our listings. I wrote about the details in our blog. It seems like there is fraud everywhere and buyers and sellers need to be protected from it by working with good real estate agents.

Wow - unbelievable! I am as amused as you waiting to see the next 'trick'.

BB, this was absolutely hysterical! It was the funniest thing I have read in a long time. The Fraud Compliance Department should be in every brokerage in every state! Can I get an Amen?

Good post!

Why didn't TLW get her gun out to counter their offer, not that it needed a counter.

BB, I wonder how brown you made the other realtor's pants!!!!LOL

I love your Fraud Compliance folks and your email. I've always just told those folks I don't look good in orange jumpsuits. Your response is Sooo much better. Love it. You are my hero too.

What an excellent post! I would have loved to have seen TLW capture your expression when you saw the offer! HAH! That is such a blatant example of mortgage fraud that it's insulting the offer was even written up! Bryant, you and your "Fraud Compliance Department" rock! :)

I love your posts. You always have something we can learn from and stories that make you wonder how some people even got their jobs!!!! Great iformation.

I say you did good, it just smells sticky. I was reading this and my right eyebrow felt as if it raised in complete independence of my other facial features....I didn't know I could do that. It's one thing to be 'Creative,' another to be 'Creatively Criminal.' I love my job but hate this stuff as well.

My friend....keep those kind of agents back east! It is amazing what some agents (I can't even refer to them as Realtors!) will do. My sister is a real estate appraiser. She would reject this kind of sale ASAP without giving it a second thought. You are right taking the stand you did my friend.

Please report this to the proper authorities. They will just keep on doing this. I liked your response, but if you don't do anything, all they've learned is to not present a similar offer to YOU.

Not only is it mortgage fraud, but it artificially inflates prices and wreaks havoc with sellers wondering why they aren't getting that much for their house.

Good job! This is the first I'm hearing about a "church" to pass funds to. I think I will also create a Fraud Compliance Department. Maybe I'll appoint my good friend Sparky to be the department head, with Scout and Scamp as her able assistants. They'll make sure all offers pass the "smell test".

BB.. Thats how we can rid ourselves from the disease , one at a time. by us taking personal responsibility ...Good JOb....

WOW! Amazing is all I can say... I think you scared the H**L out of them and they will SEROIUSLY reconsider this in the future! What an ugly dog!

Good for you Bryant. I get my share of shady brokers. For some reason they think hard money means easy fraud. Neither I, nor my company want any part of this. If I had a nickel for every time we decline a fradulant loan and the broker comes back at me and says "I thought you did hard money," I'd be rich.

this is pretty funny - and scary at the same time. Way to go with the expansion of your company

JUL

2007

BB,
Will you be my fraud compliance department? hehe... I love how you handled this person. It's sad, but bad stuff does happen to good people. Just thinking of all the people that this situation could affect and it really starts to tick me off! Ethics, not to mention values and morals. What is wrong with people?! No wonder agents get a bad reputation.... grrrr
Good job dude!

5!!!! If I could give a 6, I would!
Right on!!!

Seems as though reporting them to the authorities would have been better. Likely you are not the first agent they have tried this with ~~ and likely you won't be the last.

Ok - I was laughing at the offer, but then laughed even harder at your response. I would not have given them a chance though....directly to the law officials, it's the only way to stop them Bryant. What they will do is avoid you because you are ethical, but they will keep on committing fraud.

Said in my best Howrad Cosell imitation:

Down goes the broker ! Down goes the broker !

Bryant Tutas has knocked out blatant mortgage fraud with one swift punch.

I've actually seen a non-profit organization that operates that way. Scary.

I've seen two, Ardell. Ameridream and Nehemiah

They're both HUD approved but you had to make it through a FHA appraiser.

Bb,

Unbelievable..or should I say it figures..this is really becoming an industry to that needs to be looked at closer..they really need to clamp down and make higher standards..just as we have..how about making these jerks take an exam or refresher course every few years and make it mandatory..just like we have to..there needs to be more regulated rules or this will continue to drag the real estate market down..misrepresentation...I'll give you a gift...........look down between my l-gs.

BB,

I must agree, in your area it seems to be the norm.

I just notified a RE company near you about one of their agents and the broker is too busy to get back to us....

Very strange....

Woo-hoo!!! That's my Dad! :oD Somebody's living in fear now.

That felt good, didn't it?

Thank you, Thank You Thank you....

All too often in many parts of this business,

all there is before whatever board is a light tap on the wrist and people wonder why we have the used car dealer image...we don't police our own...thank you for putting on your badge and taking your six gun out of the holster !

Good for you! Perfect response. As always you on top of your game. I thought the email was brilliant! Hopefully they will take heed of your sound advice and stop submitting offers of this nature.

Well good morning everyone. I'm just checking briefly before I head out on a hectic day.

I DID get a professional opinion on this offer. Two actually. Of course I knew it was fraudulent but wanted to discuss the way forward. Unfortunately the authorities are sooo backed up with fraudulent activity there's just not anything they can do unless the deals are closed and the properties are then foreclosed on. That's when the FBI kicks in in most cases. They are just not set up to handle these types of complaints. I haven't heard back from the REALTOR(R) or the MB at this time. If I don't hear back from the REALTOR(R) by the end of the day I will be calling her Broker and forwarding this email. So we'll see how it pans out.

I hope this post has helped some one recognize fraud that may not have been aware before. And I really appreciate all the additional comments.

OK got to run. But I'll be back. Thanks.

Hey maybe I should send them a link to this comment thread. That should clear up any doubts the REALTOR(R) may have.

Un-freaking-believeable!! And the Mortgage Broker's response was "we do this all the time". Holy Sh*t!!! And people wonder why we have such a high surge in foreclosures right now! What a bunch of scumbags!

Hooray for you. Hopefully any Newbies will pay special attention to this and if they aren't aware of how these things happen this post will help them.

Becky, quit holding back and tell us what you really think!!! LOL

BB: I bow to you. You are the master, no doubt about it. And if this post is remembered by even just one of us, you have done a damn good public service here.

Gift of equity is legal if the gifter is family or landlord and the buyer is paying market rent. AND all is disclosed to lender. But the gift doesn't need to go thru the down payment assistance people. The down pmt assist people wouldn't have done this anyway..... I hope.

Raising the sales price in MLS is a BIG no-no.

Report EVERY instance of fraud you find!!!! This is YOUR industry.... please respect it!!!!

WTG Bryant!!

Blog Boy...

Now see. I am not the only one that believes this should be taken a few steps further.

The situation needs to be sent to the Broker and of course you should send this post their way :)

They may not like that much...But tough...Maybe they will think twice about committing FRAUD!

I for one would love to see them come in here and attempt to justify their actions. If they do that I will throw them into...

"The Active Rain Bull Shhh! Bag"...Or maybe I will feed them to Spike. He's still very hungry :)

TLW...ROAR!

Some people never learn.....a blink man on a pogo stick could have smelled this one! Nice post Bryant, as always. I look forward to your next catch.

Good job, BB. It is truly scary what some Realtors are willing to do for a commission, even risking criminal liability and imprisonment for the sake of the almighty buck. I fear this is happening more than we will ever know. Fortunately there are some honest people like you still around.

You go BB. I had one a couple of weeks ago where the sellers were asked to give the buyers some money. people just don't get it.

Good Morning BB-

Again- you have brought to the forefront a very important topic and in a most humorous way. I enjoyed the post but also the comments. Very entertaining. Thank you: )

Broker Bryant,

I always love reading your posts. I really have to look deep between the lines to try to discern your meaning...NOT. Good job. I really appreciate your direct, up-front approach. Thanks.

BB,

love your post, and, yes, u done well.

BB, Good post. This has become more and more popular in our area as well. All indications are that there is about to be a real nationwide crackdown on this type of fraud. Not a moment too soon...

Uh, er.... or maybe you should have just 'counteroffered'

Send THAT youtube to the broker. LOL

Bravo!!

I had a discussion with a mortgage lender a few weeks back when I was "picking apart" his fancy pre-approval letter. This lender stated this: "The seller would have to provide a 'forgiven' 2nd mortgage to be used as the buyers (his clients) down payment. Of course I would have to fudge the listing information and raise the asking price of this home". I informed him that what he was suggesting was illegal, and that if I *ever* saw an offer with this verbage I would turn it over to whomever would be interested.

I never heard back from him (or from his clients) and my sellers DID sell their home to people who could afford it without stooping to mortgage fraud.

that last youtube was rippin' your funny!

BB-There are times when I think "wow, I wouldn't mess with him" then there are others I think "He's too darn nice". This is an example of you being to darn nice. You should have reported them.

TLW- "I'm just the wife of a Blog Boy" Pl-ease. We know better. SVW

Hey guys. OK I made it back. Here are just a couple of guidelines related to the FHA and nonprofit gifts:

FHA deems the payment of consumer debt by third parties to be an inducement to purchase. While FHA permits sellers and other parties to make contributions of up to six percent of the sales price of a property toward a buyer's actual closing costs and financing concessions, this policy applies exclusively to the provision of mortgage financing. Other expenses paid on behalf of the borrower must result in a dollar-for-dollar reduction to the sales price. The dollar-for-dollar reduction to the sales price also applies to gift funds not meeting the requirement that the gift be for down payment assistance and is provided by an acceptable source. When someone other than a family member has paid off debts, the funds used to pay off the debt must be treated as an inducement to purchase and the sales price must be reduced by a dollar-for-dollar amount in calculating the maximum insurable mortgage.

NOTE: FHA does not "approve" down payment assistance programs in the form of gifts administered by charitable organizations (i.e., nonprofits). Mortgage lenders are responsible for assuring that the gift to the homebuyer from the charitable organization meets the appropriate FHA requirements and the transfer of funds is properly documented. In addition, FHA does not allow nonprofit entities to provide gifts to homebuyers for the purpose of paying off installment loans, credit cards, collections, judgements, and similar debts.

ACCORDING TO ED RYBCZYNSKI, THE ONLY WAY THE ABOVE ATTEMPTED FRAUD WORD WORK IS IF THE TITLE COMPNAY WAS USING 2 HUD1 STATEMENTS. So it would require the title company, mortgage broker, lender, realtor and possibly the appraiser commiting fraud.

This is just insane. I cannot believe this. Honestly, I would not have been as nice as you. I would have reported it to the board, Commerce Department, the broker, and more.

What's really sad is that the broker may already know...

Here I am to be contrary again...actually, not. This one does seem to be fraudulent, but I did want to make the point that 3rd party assistance, in the right circumstances, is legitimate. My question would be how they ever thought that they could get it appraised?

Bob Mitchell

ValueList Real Estate Services, Inc.

Bob, this particular offer is 100% fraud on so many levels it blows me away. Here's the link to the non-profit "church" which only has a po box and would have made a 5% ($6,000) for "gifting" the seller's contribution.

http://www.ifmcgift.com/about_us.htm

Bryant

After thinking about the attempted offer, makes want to go take a shower to get rid of the sleaze. I think it's atough call to determine how far to press the matter. If you file a complaint, you may get wrapped up in preparing written testimony, may have to go to court and so on. I guess my line in the sand is if they had in some way financially harmed my client with the deal falling out or other events related to the fraud. Great post!

Bryant,

Nice! I had a mortgage broker approach me with a similar deal. He said that his buyers are "pre-approved" for 95% LTV and want to offer on a house that is listed at $365,000. Guess what he said his clients wanted to offer...$410,000 with a 3% seller concession and the seller to carry back 5%. My BS sensors were on overload and I basically told him that I submitted it to my broker before submitting it to the other agent. I can't believe the things people would try for a quick buck. I know that our licenses are much more valuable to us than that. Great post!

BB,

We are dealing with this here too. Its unfortunate that others are 'going along with this'. We all need to do what you did & put a stop to this! I can name a few agents here who no longer show my listings because I've told them these type of offers are mortgage fraud.

I'm curious, did they reply to you?

JUL

2007

You seem to have yourself a chance to get a new home Bryant. 3 walls and one framed with bars! Why not go for it! You get free food, board and for just a few years and think of the saving.

I guess I'm always surprised by how sleazy some agents are.. It's something I've never gotten.. besides it's a lot more work then playing it straight..

Bryant,

That's insane! It makes me wonder about that agent's history. I'd like to know what her past clients would have to say about her. It doesn't look like she'll last very long in the business. Other agents might isolate her until her reputation is so tarnished that it keeps her from closing any transactions.

Thanks for this post. It's a big reality check for me.

Susan, Good morning, Nope never heard back form them. I guess I need to do some broker to broker communications today:)

Joshua, I'm glad you found this post. I know you are newer to the business and this will help alert you to fraudulent activity. Just say NO!

Kaye, Good to see you. I see you made the rounds this morning. Thanks!

Todd, That does sound relaxing. Don't think I want to deal with the rear entry issue though:)

Chris, That's sounds like a wonderful deal!!! I'm glad you recognized the attempt at fraud.

Hi Dave, We certainly get slimed with a lot of crap in this business.

Unbelieveable! I'm glad you posted this for everyone to read. I agree with those that would have turned the lender in.

Reading that letter to them was like watching a spray of bullets spittin' out a gatling gun!

YOUCH!

Great job I gotta get me one of those Fraud Compliance Departments!

Mike - the cow bell thing was hilarious.

What I would really like to see is TLW taking her shotgun to the contract. Now that is real fun and great for a Friday afternoon!

JUL

2007

BB, I agree with TLW that this needs to be taken a step further. Sure the FBI is busy, but can it not be taken to FREK and your local Ethics Board? I don't go this deep into the paperwork so I don't know. Just because you turned them down, another Listing Agent may not. I'd like to see them stopped before they could go any further.

Good Job My Friend! :)

BB - The only thing I would do differently is turn it in this time - not give them another bite at the apple with some less savvy licensee. Great FCO video - that's what brought me to this post!

I"ve had my run ins with offers of this kind. Thank you for doing the right thing. Sadly many others would not have. They would've played the game to the hilt.

JUL

2007

Hey everyone, Looks like I abadoned this post. Sorry about that. It's been a busy weekend. As always thanks for stopping by.

JUL

2007

Bryant, the hills are alive with schemes from these "charities" that exist only to "legitimize" phony down payments, boost listing prices, and collect a fee for doing so. They are being shut down one at a time, and agents and mortgage brokers should beware of them.

BTW, I like your email response to the agent and MB.

Man, the first time this happened to me, a novice at the time, I was excited for the offer but it did not smell good. As Bryant's, they were adding addendums and I was supposed to mark the extra money as if for repairs...the contract price was supposed to be inflated and change the MLS.....duh, even a rookie knows this is not good or right....this guy was a slick talker and he told me this is done all the time...yea, and some of those people are in jail, now!!....what do I look like to you...???? I luckily had the good sense to tell him to lose my number, my name, my city and anything else he had on me.... I wish I had that letter at the time, may I please keep it for the future?...... wow, what satisfaction I would have to imagine their faces reading THAT letter....Regards all, DavidC

He's coming after them!!!

great idea! excellent post... I look forward to more very helpful information. Thanks again!

JUL

2007

BB: I am very happy the loudest voice in the rain has touched on this. THANK YOU!

Great post Bryant, you make me proud and I don't even know you. I had a very similar situation last year here in Michigan, love to know what happens

JUL

2007

Fabulous, right on post! I have been "invited" numerous times to do variations of this. The most common is to negotiate for some huge seller contribution then they find out their loan won't allow more than 3 percent seller contribution (some allow up to 6), so they want the seller and title company to pay "invoices" off the HUD to third parties for "repairs" to be done. The best one was when I asked who the heck this person was, and they said, oh thats the buyers sister, you can just pay the overage (over 3%) to her. When I expressed the opinion that I had no interest in visiting the Federal Penitentiary for an extended vacation, they said 'Huh?, we do this all the time". Scary.

Shannon Ware, RE/MAX Results, St. Louis, MO shannon@soldonshaw.com

JUL

2007

It really shows how easy it could be to slip over the line. When I make offers using nehemiah or similar i always state on the offer that the agents will be paid on a purchase price of $(whatever the price is without gift funds). The difference is this is on the contract and not on addendum. Nothing hidden.

If the loan officer called you and tried to justify the whole thing I really do think it should be reported. My opinion anyway.

Great post and great job dealing with the fraudsters

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