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.
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?
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