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Florida REALTORS may be liable if fraud is committed in a Mortgage Transaction!!!!!

By Becky Troutt

Industry Observer with No longer practicing real estate as of 2008.

October 19, 2007 08:56 AM

I just received the following email from my local Association of REALTORS:

"You could be liable... Did you know that if you are involved in a real estate transaction that involves a mortgage, and a fraud is committed by the buyer, the seller, or the closing agent you as a REALTOR may be liable for fraud and could be charged with a felony?"

"In July, 2007, Florida passed into law a mortgage fraud statute F.S. sec."

"817.545 which broadly defines the mortgage lending process to include anyone who receives proceeds from a loan transaction. F.S. sec. 494.0025, states that it is unlawful to be indirectly involved in a loan transaction that which operates as a fraud upon any person in connection with the purchase or sale of any mortgage loan. Both of these statutes are disturbing in their implications as to the duties of REALTORS."

They are holding a seminar, which I don't think I will be able to attend on the date in which it is being held. But my question is, What do we do to cover our arse so we aren't held liable? How am I supposed to know if someone else is committing fraud to get a loan in which I have no knowledge of? I'm not a Mortgage Broker. I don't handle loans, so how the heck do they expect me to know?

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Update:

Here is a link to the Statute:

It does state that the person would have to have knowledge. I guess the way the email was written kinda freaked me out. Maybe that was their intent...

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Martinelli Caputi

Martinelli Caputi & Associates, Ltd. - Warwick, RI

& Associates, Ltd.

Becky: I would definitely be concerned here.... but at the same time, I doubt the legislature would pass a law that holds a Realtor liable for a fraudulent act that he/she had absolutely NO knowledge of! If you have a copy of the exact statute, please forward it along to me and/or post it on AR. :) Thanks!

Oct 19, 2007 09:09 AM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

Becky, As you know fraud is rampant in our state and personally I feel this law needed to be passed. REALTORS(R) need to be very aware of the red flags in a transaction. I get fraudulent offers across my desk at least a couple of times a month. I'm not worried about the new law. I will however continue to cover my ass and document everything in a transaction. As long as we are doing the right things we will be fine.

I do feel the letter of the law is very broad but it's better than what they had before which was nothing.

Oct 19, 2007 09:19 AM

Becky Troutt

No longer practicing real estate as of 2008. - Bradenton, FL

It does state that the person would have to have knowledge. I guess the way the email was written kinda freaked me out. Maybe that was their intent.

Anyone that does have knowledge of fraud being committed ought to be charged with a felony. DUH!!

Oct 19, 2007 09:24 AM

Richard Perkins

R PERKINS REALTY - Stockton, CA

Hey good post always looking for good info in this area. Thank you

Oct 19, 2007 09:29 AM

Jeff Payne

The Payne Group at Keller Williams Success Realty - Panama City, FL

Panama City Real Estate

We see these types of deals quite often. If you have knowledge of mortgage fraud, you could be held liable.

Oct 21, 2007 01:28 PM

Todd Clark - Retired

eXp Realty LLC - Tigard, OR

Principle Broker Oregon

Becky, this is nuts. We really are to stay out of the personal financial business other than send them to a mortgage broker. IF a buyer cooks their numbers to get a loan, how am I supposed to know. I am not going to start calling everyone on of my buyers places of employment and ask for tax returns for the past 5 years to make sure they are not lying.

I do work with people to help them fix their credit when I do a lease option, but I don't dive into how much them make. I just look at a score, what is out standing and advise them how to bring up the score and pay things down faster using certain formulas. But, I don't call the boss and don't every plan too. I think you state maybe way off on this one!

Oct 22, 2007 02:50 AM

Jay Beckingham

Christensen Financial Mortgage - Port St Lucie, FL

Seniors ROCK!

if you know that a buyer is in any way knowingly deceiving a mortgage lender about any part of the transaction, or not disclosing pertinent information, or conducting part of the transaction outside of the contract, then there can be a problem.

you can't just look the other way.

Oct 26, 2007 01:49 AM

The All Pro Team

EXIT Realty Leaders - Crystal River, FL

Becky it is true, not only are agents liable but title officers too. There is a 19 year old girl in Marion County FL that thought she was being helpful by setting everything up and was just given 3 years in prison for fraud. I really don't think she knew that she was committing fraud, she was just trying to be helpful. Moral of the story...if it doesn't seem right, stay away!

Oct 26, 2007 01:58 AM

Art Blanchet

On the Outside Lookin' In - Sebastian, FL

Stranger in a Warm Land

Interesting the singling out of "brokers" in your blog. I'm sure it was inadvertent and, unfortunately, conditioned by the media. Not your fault.

We are all in a witch hunt right now - every one of us. We must do the best we can and hope this legal hysteria passes quickly.

Nov 06, 2007 02:43 AM

I didn't think I needed to say I'm not a Mortgage Broker, Lender, Banker or anyone else that deals with the loan process all in the same sentence, but if it makes you feel any better, I'll cover all the bases for you.

That work for you? ;)

Nov 06, 2007 02:51 AM

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Becky Troutt

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