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Ignorance of Mortgage Fraud is NOT an Excuse - FAQ#2

By
Real Estate Broker/Owner with Criado Realty 0548772

I think we've all heard that not knowing the law is not an excuse. I learned that when I bought a car with tinted windows from a used car lot and was later issued a ticket for dark tint. FortunatelY for me, the car dealer removed the tint and paid my ticket. But MORTGAGE FRAUD isn't so easy to escape.

Just like in all aspects of real estate, a Realtor can be held accountable for mortgage fraud EVEN IF innocent. In the case of Realtors, however, we are supposed to know everything about anything having to do with the vertical alignment of the sales process. So, some Realtors (lenders and buyers too) have been imprisoned over such oversights.

From a Real Estate Broker perspective, which I am, that means that it is im[perative to put forth a Mortgage Fraud disclosure to make it very clear on your first appointment that it will not be tolerated. If you make it a part of your buyer meeting routine, it will become automatic. That's the kind of thing that will stand up in a court of law.

From a consumer perspective, there may not be a clear understanding of the definition of fraud.  Simply stated:  an intentional or unintentional misrepresentation of material facts pursuant to obtaining a loan.

The most common misrepresentations include:

1. Employment status or income

2. Taxes

3. Outstanding collections

4. Not being honest about the owning status - owner occupancy v. investment property

5. Lump sums of money that are borrowed, not gifted

I truly think most people mean well, that they don't think anything will go wrong so they slightly misrepresent. But facts are facts, and lies are lies, no matter how big or small, or what the reason. If a buyer commits fraud, even in the slightest bit, they put themselves, their family, and all those who financially benefit from the sale including the lender and Realtor, at financial and prison risk.

Is it really worth it?

 

Posted by
Cathy Criado President & Founder
MBA, REALTOR, BROKER, NAR GREEN, EcoBroker
Published Author
Your Real Estate Consultant!
 
999 E Basse Rd. #180-425, ​San Antonio, TX  78209​
​Direct:  (210) 560-1891
 
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Kristine Ginsberg
Elite Staging and Redesign, LLC - Short Hills, NJ
NJ Home Stager

Cathy - it's scary how Realtors can be held accountable for mortgage fraud and to your point, ignorance isn't an excuse. Very eye-opening post!

Jun 01, 2012 02:04 AM
Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Cathy, Most Realtors might say "it won't happen to me" but you would be surprised!! A potential buyer was referred to me by one of my clients, when I spoke to her on the phone, she advised me that she was already pre-qualified(which doesn't mean anything). When we met for the first time, I was asking her questions, I asked for the reason of her move, whether she owned another home or not. She said she was living with her mom and wanted to get her own place..GREAT!! I asked if she owned another home, answer was NO!! When we started looking at homes, she came with a gentleman(her soon to be ex-husband). I checked his name in Public and Tax Records and indeed he owned a home and was behind on payments, in Active Foreclosure. When I asked her about it, she said her name was not on the mortgage or the deed. When I questioned the Mortgage Broker, he assured me that nothing showed up on her credit report, again, that doesn't mean much!!

I told her I wasn't the right agent for her, wished her luck and she went on her merry way!! Mortgage Broker later emailed me to let me know that she made an offer on a house which was accepted(with another Realtor) and underwriter discovered that her name was indeed on the Deed.

It's scary but you can't ever be too careful and if doesn't sound right, it probably isn't.

Jun 01, 2012 02:15 AM
Anna "Banana" Kruchten
HomeSmart Real Estate - Phoenix, AZ
602-380-4886

Cathy excellent post about mortgage fraud.  It's extremly important to do absolute best we can upfront to ask the right questions. There is so much more to aware these days as agents than there ever was the last 20 years. Keeping up with all the changes is a full time job.

 

Featured in BananaTude


Jun 01, 2012 02:27 AM
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate Services

Cathy, No, it is not worth it.  I would add that if we know Fraud is taking place, we also have a duty to report it.  I did once ... and the lender did NOTHING ...the loan was funded - transaction closed.  At least I am on record of disclosing.

Jun 01, 2012 02:39 AM
Rebecca Gaujot, Realtor®
Lewisburg, WV
Lewisburg WV, the go to agent for all real estate

Cathy, great post and suggested.  Fraud is scary and as Realtors..we need to be on our toes at all times.  Fraud...it is definitely not worth it!!

Jun 01, 2012 04:20 AM
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

Good Evening Cathy, VERY WELL SAID.... it is a very important subject and even more important to be on guard for. Working Short Sales and Foreclosures i am completely puzzled how most of these mortgages got approved. Have a Great Friday

Jun 01, 2012 09:31 AM
Jill Sackler
Charles Rutenberg Realty Inc. 516-575-7500 - Long Beach, NY
LI South Shore Real Estate - Broker Associate

Cathy,  suggested. This is a very important topic. Your car dealer was honest, as well. I'm very impressed.

Jun 01, 2012 09:46 AM
Kwee Huset
Kwee Huset Realty - Venice, FL
Venice Florida Homes For Sale

Cathy, thanks God, most of the buyers I work with they pay cash. As I know Form 4506 T is part of the loan application, it will be difficult to cheat. Suggested. 

Jun 01, 2012 11:23 AM