The Federal Mortgage Fraud Task Force is looking for crooked mortgage brokers, dishonest real estate brokers and cheating home buyers and real estate investors. While most people play it on the straight and narrow, good deeds can be mistaken for bad. Stay out of the mortgage fraud spot light using a few simple techniques!
In the current home buying climate the deals are hot, the financing is hot and the buyers are in trouble. The buyers?
Yep. If they can get the loan they can take advantage of some fantastic deals. The question is, can they get the loan? Some buyers want the financing so badly they are willing to fudge numbers or cut corners to get there. Sometimes it does not even take that. In general, you have committed mortgage fraud if:
- You took cash out of the bank and paid off debt without telling the lender;
- You bought a car prior to closing on your loan and you didn’t tell the lender;
- You are getting any credit for anything at closing and did not tell the lender;
- You make any agreement the lender does not know about at closing, usually called a ‘side agreement’;
- An adjustment you make at closing is not reflected on the HUD-1 settlement statement;
- Part of your down payment or closing costs comes from work you will be doing on the property;
- For bond loans, if you get a substantial RAISE!
- Any part of the down payment is borrowed;
- You have had any significant job change, quit your job or started a new job without telling the lender;
- You don’t move into the property when you certify to the lender you will be an owner occupant;
The Real Estate Settlement Procedures Act (RESPA) is very specific about how a closing should proceed,
especially one that is subject to financing.
Mortgage fraud is easy to fall into and hard to get out of. Even judges have fallen into the trap. For example, in Tampa Florida, Judge Thomas E. Stringer plead guilty on August 6th 2009 to bank fraud. He was helping a young dancer “protect” her assets. In the process, he bought a house for her in Hawaii. Things went sour with the dancer of questionable repute and the deal was reported. Judge Stringer had not been completely candid in his loan application. He failed to disclose he had borrowed all or part of the down payment. That is a big “no, no!”
The Judge Stringer case stands for the proposition you don’t have to go into foreclosure to commit fraud. He was current with his loan payments. That was not the problem. His only mistake was not telling his lender he had borrowed the down payment. No losses were reported by the lender!
In the simplest of terms, any statement made to the lender which is not 100% accurate may be considered fraudulent. Any change in the borrower’s financial health, for example buying a car or incurring extra medical bills without advising the lender, …