Well, whether fraud has been committed is a legal determination. Realtors are bound to duties of honesty, fairness and disclosure. We need to adhere to our duties in the face of unfair and unscrupulous dealings, including suspicions that smack of fraud on one of the parties. A court can decide later if it amounts to fraud.

I don't get how the lender is the seller. The lender is the lender, even though it may pay some costs.

I work based on my own ethics and the laws in my state. If I knew something was going on which was fraudulent, I would withdraw from the transaction. Period

I was in a situation that looked like it could be a situation that may be considered less than upfront. I told my clients that if they wanted to proceed, then I would withdraw.  Fortunately, there had been no action, just talk.  My buyers decided they would not move forward either so that was the end of it.

Kathleen needs to be reported no matter what level it is committed.  As a Loan Originator if I even suspect fraud I have to report it on a Suspicious Activity Report (SAR's).  The report is then forwarded to the FBI by the agency we report to.  The FBI may not act upon it right away, but begins to compile a folder on the individual.  Depending on the seriousness of the fraud, action will be taken or added to the folder on the individual.  Once the FBI has enough to take action, action is then taken at that point.

If I do not report the suspicious activity I could lose my license and face other actions taken against me.  Fraud is nothing to play games with and NO transaction is worth possibly losing your livelihood, and reputation over.

Kathleen, Why not call the CAR Legal Hotline to get the straight scoop from the attorneys.  I would.  My guess: BRE regs require you to report any fraud that you become aware of.  I am positive you can't cancel a sales transaction because you're not a principal.  You can extricate yourself from it and you can report the fraud, but you can't cancel a transaction unless you're a principal. 

As a REALTOR, it is not my responsibility to proctor what a client does with their money. My job is to make sure all the signatures are on the paperwork and then find a ready, willing, and able buyer.

I don't mow lawns, give people rides to the airport, or "keep an eye on Uncle Earl". All things I have been asked to do in the last month :)

Hello Kathleen,

You state what should be obvious - there is no gray area in fraud and ethics should always prevail.

Kathleen, I would think if there was a true case of fraud, you could become an accessory. Time to contact an attorney.

I used to have a client that crossed over frequently into ANYTHING GOES land to make a buck. I didn't want to go with him so we parted ways. Before I left, I spoke up many a time about the conduct and the consequences...Deaf ears...so be it. I'm gone. I appreciate out of the box thinking, creativity and taking a risk...To some that means robbing a bank is permissible

I don't think it falls under agency duties but under Federal Law you must disclose know mortgage fraud of any kind.

I sure would report so as not to get caught up myself in legal action later on. We've had a number of agents in our area who are now facing serious jail time because they said nothing and as such were considered co-conspirators. The Feds are nothing to fool around with!

Kathleen, I am little stubborn about doing things right way - so if it was me, I would report.

Kathleen, I had to stop back to see all the comments.  Can't wait to see what your BRE suggest.  

I have walked always from situations like this. I never fight my intuition when it comes to stuff like this. You asked all the right questions in your post and I know one thing for sure, you will always do what is right.

Kathleen, good luck with reporting the fraud.    You are always the ethical and honest Realtor!

Would an agent cover up fraud by any seller? Whether or not they are the lender, it wouldn't be a good thing to do.

Nice presentation of important stuff to know.  Keep it up!  Good job!

Nice post Kathleen.  Your posting are always so enjoyable to read.