Be ignorant or be a student of real estate. It's your choice!

By
Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

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.

FHA will allow the down payment required, usually 3%(aprox.), to come from a family member or a non-profit organization such as Nehemiah or Ameridream.

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?

Copyright © 2007 Broker Bryant Real Estate Ramblings | All Rights Reserved

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 Tutas Towne Realty, Inc handles Florida real estate sales, Florida short sales, Florida strategic short sales, Florida pre-foreclosure sales, Florida foreclosures in Kissimmee Florida Short Sales, Davenport Florida Short Sales, Haines City Florida Short Sales, Poinciana Florida Short Sales, Solivita Florida Short Sales,  Orlando Florida Short Sales, Celebration Florida Short Sales, Windermere Florida Short Sales. Serving all of Polk, Osceola and Orange Counties Florida. Florida Short Sale Broker. Short Sale Florida.

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Rainer
137,413
Rich Kruse
Gryphon USA, Ltd. - Columbus, OH
B - I spend a lot of time in front of the judge.  Trust me, stupidity is not a defense.
Dec 08, 2007 03:22 AM #35
Rainmaker
147,121
Kaye Thomas
Real Estate West - Manhattan Beach, CA
e-PRO, Manhattan Beach CA
BB.. Nice post and followup-  I know I sound like a broken record but  real estate agents should not be handling loans and mortgage brokers should not be selling real estate.  Aside from the conflict of interest that is inherent ..way too many individuals are not really proficient in either field and would be far better off to know one aspect of the business well rather then be half knowledgeable in two areas.
Dec 08, 2007 03:34 AM #36
Rainer
68,711
Lisa Spalding
Casa Latino Four Corners, REALTOR, CDPE - Longwood, FL
REALTOR, CDPE

I agree with Kaye's post--Most real estate people need to make a choice--EITHER real estate agent OR loan officer--NOT both.  I only know of a handful of people that can do both adequately, never mind well.  It IS possible but it's unlikely.  I mean, look at your post.  If the RMB had chosen one field or the other, he may not have chosen to use the bad side of the force, uh, I mean he may not have chosen to try to set up the deal in the way you've described. 

But, at least, in the final analysis, YOU--the well-educated, scrupulous, ethical, kick-butt real estate-only broker, were able to pull a deal that was down the tubes back out of the toilet and structure the deal the way it was meant to be structured.  Woo hoo!  Way to use the force for good!  (I don't know why I'm on a Star Wars kick but there you have it.  Do you have any good Star Wars pics to morph into BB as a light saber-wielding hero?!  Then you can insert it here...)

Dec 08, 2007 06:15 AM #37
Rainmaker
42,507
Judy Cicalese
William Raveis Real Estate - New Canaan, CT
Market Knowledge-Social Media Savvy 203-638-7812
Thank you again for showing us that we can and "must" be problem solvers.  You don't give up and when you share with us, we all learn.  I probably would have ended that relationship after he suggested fraud.  You didn't and that's why you're successful.  thanks again for great info. 
Dec 08, 2007 07:00 AM #38
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Hi Gail, It ain't closed yet....but at least we have a better shot at it this time.

Hi Diane, As members of AR we have all the research done for us already. All we have to do is read. I LOVE this place!!! 

Thanks Dan. Now I just we can get it closed this time around. This is my sellers 5th contract!!!!

Rich, Yep I think a lot of folks would be surprised when they get up there and plead ignorance. It won't work and is a good way to lose your license.

Kaye, We can't hear enough. So keep right on preaching it.

Lisa, Let the force be with you!!! Feel free to make me a Star Wars graphic if you know how. I don't.

Judy, I owe it to my Seller to try everything I can (legally) to get the deal closed. As hard as it is not to some times, I don't have the luxury of telling guys like this to bite me!!!

Dec 08, 2007 08:06 AM #39
Ambassador
261,096
Fran Gatti
RE/MAX Integrity - Medford, OR
Managing Principal Broker - RE/MAX Integrity
Bryant - Good job.  Integrity and honesty is always the way to go.  I don't know you except through your posts, but you seem to have both in excess.
Dec 08, 2007 09:11 AM #40
Ambassador
1,090,722
Celeste "SALLY" Cheeseman
Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE
I came back to see what I typed last night...lol! I was pretty tired.....had a very restful sleep....and as always....being up front and honest with the information we acquire is surely why we become a "professional"
Dec 08, 2007 11:15 AM #41
Rainmaker
720,287
Teri Eckholm
Boardman Realty - White Bear Lake, MN
REALTOR Serving Mpls/St Paul North & East Metro

Hi BB--Lazy...Just plain Lazy (or Indolent if you are learning words for an SAT test) we have used that word a lot this week....To not learn HOW to do YOUR job professionally is lazy. Good thing you know how to do yours!

Dec 08, 2007 12:59 PM #42
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Thanks Fran. I do try.

WooHoo, Glad to hear you got a good nights rest last night.

Teri, It is lazy!!! I'm constantly learning new stuff about real estate. Plus I learned a new word today!

Dec 09, 2007 12:17 AM #43
Rainer
19,021
Heather Elias
Century 21 Redwood Realty - Ashburn, VA

BB---That's awesome! I'm glad the buyer's agent was receptive and that you may be able to salvage this. I always hate to see buyers have bad advice/representation. Hopefully this agent will recognize that he/she needs more training and education in that area and do something about it!

Cheers,

Heather

Dec 09, 2007 12:50 AM #44
Rainmaker
311,960
John Occhi
Mason Real Estate - Temecula, CA
SRES,CPRES.ePRO - Temecula-Murrieta CA Real Estate

Bryant Tutas, Broker-REALTOR(R) Tutas Towne Realty, Inc - It really is amazing how many people are out there stumbling there way from one deal to the next.  heck, if mortgage fraud worked the last time, why wouldn't it work this time?  Right?

Now Have a Blessed Day,

John Occhi, Hemet REALTOR®
Mission Grove Realty

Dec 09, 2007 05:11 AM #45
Rainmaker
706,979
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

BB, You may still have a problem. FHA does not allow a broker to handle both the sale and the loan. If the other agent is in the same office there is the chance that the transaction is all under one license (the broker for the office) and therefore not permitted.

I'm surprised that no loan officers have commented on this.

Bill Roberts

Dec 09, 2007 06:15 AM #46
Anonymous
Anonymous

Bryant,  I firmly believe that once all sides of the transaction are fully educated and work well together in our respective specialities the consumer wins.  Every time I hear someone say they just turn their clients over to the mortgage folks with no other follow up I cringe.  In  my short time in, I've had to rescue a couple of contracts that buyers would have walked away from if I hadn't know how to ask the right questions.

I still think licensing requirements that included finance classes would help this.  It's the one area that is truly lacking in any education classes I've seen and since it's not required most simply don't take them.   If we could get CE for being here it would be great since Ive learned more parked at my computer than anywhere else!

 

Dec 09, 2007 06:37 AM #47
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Bill, I didn't know that. See I learn something everyday. Now not only will I have to do some homework on this but I'll have to make sure we are OK on the buyer side. Thanks for the headsup!!!

John Occhi, Good to see you. I hope all is going well with you.

Heather, I hope he has learned something. I hate to see a perfectly good buyer lead down the road of mortgage fraud.

Dec 09, 2007 07:51 AM #48
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

ill, I didn't know that. See I learn something everyday. Now not only will I have to do some homework on this but I'll have to make sure we are OK on the buyer side. Thanks for the headsup!!!

John Occhi, Good to see you. I hope all is going well with you.

Heather, I hope he has learned something. I hate to see a perfectly good buyer lead down the road of mortgage fraud.

Dec 09, 2007 07:51 AM #49
Rainer
68,842
Judy Tuscano
Prudential Verani Realty - Nottingham, NH
NH Real Estate Professional
Broker Bryant, I am so glad to hear that you were able to pull this deal out of the fire. You are right that we should do all we can to get the deal done for our clients. I am happy to say that I work with my hubby "the big guy" and he knows what I don't so we kind of give people a 2 for 1 package. It really helps when we get a hairy situation and we are not afraid to ask for help from others more experienced than ourselves. 
Dec 09, 2007 09:50 AM #50
Rainer
105,415
Mike Norvell Sr
Morris Williams Realty - Leesburg, FL
Norvell Consulting Group
BB, I went on my own time and got my mortgage license so that I could have more current knowlege about what is available. So I am also a RMB, but I refuse to play both sides of the fence. I do believe that if more Realtors had a good working knowledge of financial products there would be less fraud. ALso, we need to be able to say what is a good loan and what is not.. Keep up the good work
Dec 09, 2007 12:31 PM #51
Rainer
105,415
Mike Norvell Sr
Morris Williams Realty - Leesburg, FL
Norvell Consulting Group
Hey, I like what that last guy said, and he is right too
Dec 09, 2007 10:26 PM #52
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Judy, It sounds like you and the "big guy" have a good thing going. Good for you.

Mike, We can never have enough knowledge in this business. learning our craft should be an ongoing concern. Thanks for stopping by.

Dec 10, 2007 08:05 AM #53
Ambassador
2,135,080
Respect Realty LLC
Respect Realty LLC - Milwaukie, OR
Brokers - Oregon / SW Washington Real Estate

I'm glad you stepped up and saved this buyer and other broker and anyone else from possible jail time! It shows you are a real professional and are out to protect the public, despite the other agents ignorance.

Dec 16, 2007 04:48 PM #54
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