Suspect Mortgage Fraud? Would You Do Anything About It?

How could a fee on a HUD-1 not be noticed at least by the agent representing the buyer?  The agent should be reported as a party to the fraud. They should never have let the situation develop in the first place. Any agent should know when negotiating a contract for a buyer what the closing costs are at least close enough to ensure that the seller concession does not go over the lesser of actual costs or the amount that would be permitted by the mortgagor.  

Darleen,

When I find people that have great ethics I value them -- so I subscribed to your blog.

Wow... That one shocked me! You did the right thing and handled yourself correctly. I am even more surprised that even after you confronted the loan officer, they continued to try and push the issue. Some people are just sad when it comes to doing the right thing!

Keep up the good work!

Hi Darleen,

I learn something new everyday.

Since I'm not a Realtor, I'm in the camp Penny describes...I have only seen one set of closing documents in my lifetime and wouldn't have picked up on that line item or the fraud you describe.

Just one more reason to have a Realtor that knows their stuff and that is trustworthy, huh? 

"Dollar holler and penny scream"...that's pretty funny. 

Cheers to you,

Veronica

Select Home Staging

Denver, Colorado

and now serving the Triangle Region of North Carolina (Raleigh, Durham, Chapel Hill)

www.selecthomestaging.com 

Darleen:

What a great story!  You did exactly the right thing.  How could someone live themselves after going through with something like that?  Good for you!!  I was getting very disappointed in humanity after seeing the things I see on a daily basis with the damaged foreclosures, abuse of short sales, and obvious loan fraud.  Nice to know I'm not the only moral person left.

Jack, I'm quite sure that what you describe has happened.  If you know of such a case I would urge you to report it. It almost seems that you do know of people involved in this and have not reported them.  Why not?  Oh, the premise of your first sentence is incorrect.

As a Realtor® I'm not involved in the mortgage process other than to make sure the buyer has applied according to the terms of the contract.  I would have no idea of a 'fake' loan origination fee unless I was privvy to the conversation or my buyer told me about it.  At that point, I would have advised the buyer of the possible consequences of mortgage fraud and to proceed very carefully.  I would also explain to them that I would need to step out of the picture because I would not participate in mortgage fraud.

Loan origination fees differ from loan to loan and are charged for different reasons.  My function is to advise the buyer of reputable loan officers and brokers that I have experience with.  It's up to the buyer to choose who they will work with and why.  If I see a loan that is costing outside the "norm", I will point it out to the buyer but if they choose to go forward with that loan...so be it. 

There is nothing in the original post indicating the Realtor® was participating in fraud.   

This is all a little confusing for me. I'm not really sure what the rules are outside of my area.  I have only dealt with mortgage brokers (with/for my clients), a couple of times, and both times were nightmares.  One time, the mortgaeg broker wanted to give the mortgage to the lender who offered them the largest fee (kickback??)... and not necessarily the lender that gave the client the best product/service.  The other time, the client was being charged a HUGE mortgage application fee.  Both times, I insisted the client go see someone else.  With first time home buyers, I usually take them by the hand, and I'm with them every step of the way, to ensure they don't get .... errrrr.... taken advantage of.  I know there are a lot of great mortgage brokers out there... there must be ... although I personally haven't met one yet, because I choose to have my clients deal directly with the large banks, who don't charge mortgage application fees, or any fees whatsoever, and usually the client gets a great deal, because there's also no mortgage broker to pay a fee to.

I know there are times when the large banks won't touch a client that may not have the most wonderful credit, or credit history, and in these cases, they don't have too much choice, but even so, I think as the client's agent, and having the responsibility of looking after their best interests, I always give them the choice of being physically there with them, for any negotiations that affect the purchase of their home.  Also here, the seller pays their own legal fees and the buyer pays their own legal fees, so we don't usually have to worry about that. 

... and Darleen, you did the right thing. And although we, as realtors, don't always like to complain or report the 'bad behaviour' of other realtors, if we don't, the behaviour will never stop; and we all end up having the same bad reputation.

You would think the seller's agent would have noticed it, and saved money for her client.

Darleen,

Absolutely, I say report them!  I got so fed up I started my own investigation company.  Check us out at www.mfi-miami.com  We have no problem nailing brokers, lenders, realtors or any one else that tried to screw over a customer.