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Be ignorant or be a student of real estate. It's your choice!

Hi folks. In my recent post, A "gift of equity" and the "loose fly", I briefly touched down on a RMB (Realtor/mortgage broker) that was asking my Seller to commit mortgage fraud by pretending that he was a relative of the Buyer so he could give a "Gift of equity". This post is a follow up.

After contemplating the way forward, I decided to call good ole' RMB and see if I could pry this Buyer's file out of his hands and place it with one of my trusted Mortgage Brokers(MB). My intent was to see if we could do an FHA tied in with a LEGAL "Gift of equity" or down payment assistance.

FHA will allow the down payment required, usually 3%(aprox.), to come from a family member or a non-profit organization such as Nehemiah or Ameridream.

Anyway, I wanted to see if we could get this Buyer qualified by a proven mortgage professional. Even though the Buyer's RMB was wanting to commit fraud, I wanted to try and get this deal closed if at all possible. After all that's why my Seller hired me.....to get the job done.

I called the RMB and offered him another 1% on the real estate commission to release his Buyer to my MB. He wouldn't do it. No big surprise there. BUT I did get him to call my MB so she could walk him through the FHA program. After running the Buyer through DU (desktop underwriting), he not only qualifies, but is a perfect candidate for this program.

Today, I wrote up a new contract and we are back in business. It also turns out that RMB has a MB in his office who does FHA and is more than qualified to handle the loan.

So here's the deal. Due to the RMB's ignorance of available loan products he was coercing a perfectly good Buyer into committing loan fraud which is a FELONY!!! The Buyer, the Seller, both REALTORS® and all other parties involved would have committed a felony all due to a "professional" that doesn't know what he's doing.

Folks, here you have, in a nutshell, one of the reasons for the mortgage crisis that we are experiencing right now......lack of education.

Not lack of formal education or stricter licensing requirements but plain old fashioned lack of learning your craft. You don't need higher standards to be a student of real estate. There is NO excuse for not knowing these programs exist if you are in the business of real estate.

My friends, the point of this post is to encourage all of you to learn everything you can about real estate and mortgages. As true professionals we need to be able to counsel our Buyers and Sellers. They are paying us big bucks to watch their backs and to make sure they are operating in an ethical and legal fashion.

I for one never want to have to stand in front of a Judge and plead ignorance. Do you?

Posted by Bryant Tutas Broker/REALTOR(R) Tutas Towne Realty, Inc on 12/07/2007 03:38 PM

Comments (54)

fha loans, nehemiah, ameridream, educational, mortgage fraud

54 Comments on Be ignorant or be a student of real estate. It's your choice!

DEC

2007

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

Blog Boy...

Ignorance is not an 'escape' clause.

Ha! Ha! Too late. You can't use that as your title.

Maybe next time dude :)

TLW...ROAR!

I am a Realtor/Mortgage Broker myself. I keep the mortgage license so I can easily get paid referral fees on the loan as well, however I don't practice as a mortgage broker and really don't want to. I refer all my mortgages out to a mortgage broker in our office that actually knows how to get the loans closed.

There are many Realtor/Mortgage Brokers out there, and my bet is that most of them are only good at one of those jobs (or maybe no good at either).

HHHHmmmm, I don't think I want to be one of the few who get to wear an attractive gray ankle bracelet. It isn't quite worth the couple thousand that will go in my pocket.

That is one of the main things I emphasize to realtors ..... be sure the mortgage person you are refering clients to is experienced and knowledgable in the products.

Sean Allen

BB - One of the biggest keys to success (at anything!) is to know what you don't know, what you're not good at and what you're not comfortable with. If you recognize those things then success can be all yours.

BB, Effin' amazes me! Somehow I missed your previous post on this. This guy needs to be reported, because he's just going to continue and the sad part is that innocent people are going to get hurt besides the way he's tarnishing the reputation of reputable associates.

BB: Neither do I want to stand in front of God and hear him say..."How much commission did you make for selling your soul?" GREAT STUFF!!

Elizabeth, You are so right. I think the 'splainin' line is going to be real long.

Marc, I have now had a couple of very long talks with this guy and think I may have got him to see the light. You know reporting him sounds all well and good BUT do really think anyone is going to do anything for something that didn't happen? I doubt it. I would much rather try to educate folks.

Carol, Good point. I completely agree with only doing things we are good at. I do one thing....list houses. By keeping very focused on this one thing it is much easier to become an expert.

Sean, Right on my friend. I'm not quite sure how a MB could have never even heard of Nehemiah. Pretty slack in my book.

Rob, I don't have any problem doing both mortgages and sells if they know what they are doing.

TLW, Damn!!!! That would have been a much better title.

Good for you. Get involved. Agents who know what they're doing need to be involved in every aspect of this business. There's too many ?????? folks out there.

Mortage folks who keep insisting that agents should not get involved in the mortgage side of a real estate transaction. Agents who don't know what they're doing need to learn their business.

I'm not turning my buyer over to a mortgage person until I know what my buyer needs. At the same time, I don't need a mortgage person to tell me what price range is reasonable for my buyers.

I love my mortage folks. They know I'm bringing qualified buyers.

BB, The fact that were able to talk to him is great. I actually thought the same thing that nothing would come of it since nothing actually transpired.

BB, between you and Lenn and Jeff and many others here, I am learning tons. Yikes.........Keep um coming.

Lenn, I knew you would like this. Proactive is the only way to go in this business.

Marc, I spend a lot of time educating my peers. We do have the power to change our business for the better. AR is a great forum for doing this.

Missy, Then my job is done here. :)

Broker Bryant, I am learning from you. Now only if you were in our state, CA, to teach us the how to deal with the BS the attorneys have set in our contacts...:0)...just kidding.

BB, anoher great success story, I am glad you were able to keep persuing this and I am glad it all worked out for you. I hope this RMB has learned something.

Hi Mana, Good to see ya. How long is your standard contract? Ours is 4 pages.

Jay, I hope all is well with you and your lovely wife. I never drop a deal until I have persued every avenue. They are so hard to get right now I want to make sure it is dead and buried before I give up on it. I'm sure you do the same though.

How true BB having been in the businesss as long as we have it's not too often we see them fall thru the cracks. Sometimes you work harder on the ones that may go nowhere but at least we give it our all.

The only way to fly ...in real estate.... educate, knowledge and research.... ah, the love of the business equals .... always thinking in the best interests of the client.... and how can one do that without any knowledge? Hope I made sense...tired.

Bryant, you outlined great options for the buyer in the first post, so not surprised you took it to the next level. Great post and great advice. When we are that knowledgeable we create the opportunity. Usual good work on your part. Thanks for the insight1

BB,

Although this is not a popular opinion by some, sorry to say I think most people who try to wear too many hats in one transaction do more damage than good for the most part. Realtors who try to do loans and lenders who try to sell real estate, not a good situation most of the time.

No Offense to R/MB's, but I'd be much happier keeping it separated if at all possible. I've never seen a good one, but I don't doubt there are. However, if you're negligent, you have to know it, at least to some degree.

We have too many people who are no good at one profession, what makes them (or their clients) think they should be lousy at two?

All I've got t say is ....Amen!

Good follow up Bryant. I am a vocal proponent of separation of sales and financing. I don't think anyone should ever be both and I'm working within my industry to promote this. However, we all should know what the other does. A loan officer should never give contractual advice directly to a client but damn well better be able to converse with agents about them especially when the loan requires a legal and justifiable change in the agreement. Likewise a real estate agent should never give loan advice to a buyer - never. Just like you did you turned to a trusted professional. There is no way I can stay on top of ALL the laws and regulations for both divisions. True I can have people within my organization who do that but there is a reason I sold the real estate division and focused on the mortgage division. Bryant, I want to be more like you when I grow up.

Yes, I agree. Great follow-up. I think it's great you still went after the deal even after the uneducated goof tried to pull what he did. I was always taught that financing knowledge is critical to real estate agents. I have a lot to learn, but I love learning. Thanks for the great post.

When I first started in real estate 20+ years ago, I earned by Mortgage Brokers' license, intending to collect referral fees, but I never felt comfortable "steering" when I'd stand to gain so I just let my license lapse. Now I refer lenders only when I know they're only to work with one agent.

Excellent. Very impressive work. It's out of the box thinking that often gets things done these days. Ours is a creative process, now isn't it. And when it works, it's the most fun we have, I think.

The cartoons are already up for the piece we sent you. They take as long as it does to craft it. Hope the roar of the move is a dull one by now.

and thanks again, Mr. Tutas.

Wow. Complete ignorance with no excuse. I hope he learns a valuable lesson. I guess I won't hold my breath though.

This is why you are still do well in this weird market. You understand how to make it happen.

Greed = Shortcuts = Fraud = Jail....

'nuff said. Good Post!

Bryant- I a glad that you got her with a good and honest mortgage broker. That is the important thing. Those kind do not learn lessons easily. They usually have to fall pretty hard. Katerina

DEC

2007

Training is important...for everyone. So this RMB was not "rotten to the core" but rather lacked training? Which is worse?

Im glad it turned out well for the buyers and sellers... Im sure they are thankful you were there to make it complete with ethics and honesty. Gee, our contract is 8 pages.. plus disclosure & HOA & stuff and etcs.

Gary, Maybe I'm just naive or maybe I just choose to look at the good but I truly believe there are very few people who are "rotten to the core". Once I was told the deal wouldn't close unless my seller committed fraud, I had two choices 1. Just place the property back on the market and move forward. 2. Try to get to the bottom of the issue and see if I could find a solution. I aways choose the latter.

Hi Katerina, I hope he has learned something. If not at least I tried.

Daniel, Right on!!!

Rebecca, In this market we certainly have to pull out all the stops if we want to survive. And I DO want to survive. I'm too old to have to work for a living:)

Lisa, We can only hope. Hey maybe I'll invite him to AR.

Good morning Richard. I'm off to go read your post.

Sharon, That was probably one of the best decisions you made in your early career. I couldn't do it either.

Karl, We can never stop learning in this business. Being a member of AR really helps with the learning process. This place is a wealth of information.

Ken, I still think we were separated at birth:)

Amen back at ya brother Neal!

Jonathan, I don't like it either. I believe in doing one thing and doing that one thing better than anybody else.

Lynda, I agree completely.

Jeanean, Thanks for stopping by.

WooHoo, You do make sense. Sort of:)

BB, this is a lesson for all of us, no matter how much we think we know or how long we have been in the business the mortgage market changes daily and we need to keep abreast as well as make sure the MB's we recommend are keeping up with all of the options as well. Thanks for sharing this story with us.

Way to go, BB. You saved the day for your client. Now, that's a great lesson.

B - I spend a lot of time in front of the judge. Trust me, stupidity is not a defense.

BB.. Nice post and followup- I know I sound like a broken record but real estate agents should not be handling loans and mortgage brokers should not be selling real estate. Aside from the conflict of interest that is inherent ..way too many individuals are not really proficient in either field and would be far better off to know one aspect of the business well rather then be half knowledgeable in two areas.

I agree with Kaye's post--Most real estate people need to make a choice--EITHER real estate agent OR loan officer--NOT both. I only know of a handful of people that can do both adequately, never mind well. It IS possible but it's unlikely. I mean, look at your post. If the RMB had chosen one field or the other, he may not have chosen to use the bad side of the force, uh, I mean he may not have chosen to try to set up the deal in the way you've described.

But, at least, in the final analysis, YOU--the well-educated, scrupulous, ethical, kick-butt real estate-only broker, were able to pull a deal that was down the tubes back out of the toilet and structure the deal the way it was meant to be structured. Woo hoo! Way to use the force for good! (I don't know why I'm on a Star Wars kick but there you have it. Do you have any good Star Wars pics to morph into BB as a light saber-wielding hero?! Then you can insert it here...)

Thank you again for showing us that we can and "must" be problem solvers. You don't give up and when you share with us, we all learn. I probably would have ended that relationship after he suggested fraud. You didn't and that's why you're successful. thanks again for great info.

Hi Gail, It ain't closed yet....but at least we have a better shot at it this time.

Hi Diane, As members of AR we have all the research done for us already. All we have to do is read. I LOVE this place!!!

Thanks Dan. Now I just we can get it closed this time around. This is my sellers 5th contract!!!!

Rich, Yep I think a lot of folks would be surprised when they get up there and plead ignorance. It won't work and is a good way to lose your license.

Kaye, We can't hear enough. So keep right on preaching it.

Lisa, Let the force be with you!!! Feel free to make me a Star Wars graphic if you know how. I don't.

Judy, I owe it to my Seller to try everything I can (legally) to get the deal closed. As hard as it is not to some times, I don't have the luxury of telling guys like this to bite me!!!

Bryant - Good job. Integrity and honesty is always the way to go. I don't know you except through your posts, but you seem to have both in excess.

I came back to see what I typed last night...lol! I was pretty tired.....had a very restful sleep....and as always....being up front and honest with the information we acquire is surely why we become a "professional"

Hi BB--Lazy...Just plain Lazy (or Indolent if you are learning words for an SAT test) we have used that word a lot this week....To not learn HOW to do YOUR job professionally is lazy. Good thing you know how to do yours!

DEC

2007

Thanks Fran. I do try.

WooHoo, Glad to hear you got a good nights rest last night.

Teri, It is lazy!!! I'm constantly learning new stuff about real estate. Plus I learned a new word today!

BB---That's awesome! I'm glad the buyer's agent was receptive and that you may be able to salvage this. I always hate to see buyers have bad advice/representation. Hopefully this agent will recognize that he/she needs more training and education in that area and do something about it!

Cheers,

Heather

Bryant Tutas, Broker-REALTOR(R) Tutas Towne Realty, Inc - It really is amazing how many people are out there stumbling there way from one deal to the next. heck, if mortgage fraud worked the last time, why wouldn't it work this time? Right?

Now Have a Blessed Day,

John Occhi, Hemet REALTOR®
Mission Grove Realty

BB, You may still have a problem. FHA does not allow a broker to handle both the sale and the loan. If the other agent is in the same office there is the chance that the transaction is all under one license (the broker for the office) and therefore not permitted.

I'm surprised that no loan officers have commented on this.

Bill Roberts

Bryant, I firmly believe that once all sides of the transaction are fully educated and work well together in our respective specialities the consumer wins. Every time I hear someone say they just turn their clients over to the mortgage folks with no other follow up I cringe. In my short time in, I've had to rescue a couple of contracts that buyers would have walked away from if I hadn't know how to ask the right questions.

I still think licensing requirements that included finance classes would help this. It's the one area that is truly lacking in any education classes I've seen and since it's not required most simply don't take them. If we could get CE for being here it would be great since Ive learned more parked at my computer than anywhere else!

Bill, I didn't know that. See I learn something everyday. Now not only will I have to do some homework on this but I'll have to make sure we are OK on the buyer side. Thanks for the headsup!!!

John Occhi, Good to see you. I hope all is going well with you.

Heather, I hope he has learned something. I hate to see a perfectly good buyer lead down the road of mortgage fraud.

ill, I didn't know that. See I learn something everyday. Now not only will I have to do some homework on this but I'll have to make sure we are OK on the buyer side. Thanks for the headsup!!!

John Occhi, Good to see you. I hope all is going well with you.

Heather, I hope he has learned something. I hate to see a perfectly good buyer lead down the road of mortgage fraud.

Broker Bryant, I am so glad to hear that you were able to pull this deal out of the fire. You are right that we should do all we can to get the deal done for our clients. I am happy to say that I work with my hubby "the big guy" and he knows what I don't so we kind of give people a 2 for 1 package. It really helps when we get a hairy situation and we are not afraid to ask for help from others more experienced than ourselves.

BB, I went on my own time and got my mortgage license so that I could have more current knowlege about what is available. So I am also a RMB, but I refuse to play both sides of the fence. I do believe that if more Realtors had a good working knowledge of financial products there would be less fraud. ALso, we need to be able to say what is a good loan and what is not.. Keep up the good work

DEC

2007

Hey, I like what that last guy said, and he is right too

Judy, It sounds like you and the "big guy" have a good thing going. Good for you.

Mike, We can never have enough knowledge in this business. learning our craft should be an ongoing concern. Thanks for stopping by.

DEC

2007

I'm glad you stepped up and saved this buyer and other broker and anyone else from possible jail time! It shows you are a real professional and are out to protect the public, despite the other agents ignorance.

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