| The Federal Mortgage Fraud Task Force is looking for | | | | too much money he won't quality. What do you do if |
| crooked mortgage brokers, dishonest real estate | | | | before closing you get big raise? You better disclose |
| brokers and cheating home buyers and real estate | | | | the fact.! |
| investors. While most people play it on the straight | | | | The HUD-1 settlement statement lists all of the |
| and narrow, good deeds can be mistaken for bad. | | | | charges and all of the credits in your sale. If money |
| Stay out of the mortgage fraud spot light using a | | | | changes hands and it is not listed on the settlement |
| few simple techniques! | | | | statement then fraud has been likely committed. For |
| In the current home buying climate the deals are hot, | | | | example, what happens if the buyer discovers the |
| the financing is hot and the buyers are in trouble. The | | | | picture window in the front room was broken out |
| buyers? | | | | the night before closing. It is going to cost $600 to |
| Yep. If they can get the loan they can take | | | | fix it. The seller agrees to pay. If he writes the buyer |
| advantage of some fantastic deals. The question is, | | | | a check at closing to 'keep things simple' then fraud |
| can they get the loan? Some buyers want the | | | | will likely be committed. The picture window repair |
| financing so badly they are willing to fudge numbers | | | | must be on the settlement sheet, as must every |
| or cut corners to get there. Sometimes it does not | | | | cent spent. |
| even take that. In general, you have committed | | | | Another easy fraud trap to fall into are |
| mortgage fraud if: | | | | representations made by the buyer in other loan |
| - You took cash out of the bank and paid off debt | | | | documents. Do you plan to occupy the property? If |
| without telling the lender; | | | | you answer "yes" then you better have a pretty |
| - You bought a car prior to closing on your loan and | | | | good excuse why you didn't if you are not fat and |
| you didn't tell the lender; | | | | sassy in the house a year later. |
| - You are getting any credit for anything at closing | | | | But what happens if you get a last minute job |
| and did not tell the lender; | | | | transfer or change in life circumstances? Must you |
| - You make any agreement the lender does not | | | | live in the house just to solve the potential fraud |
| know about at closing, usually called a 'side | | | | accusation? Of course not! The question is what |
| agreement'; | | | | were your intentions when you signed the loan docs. |
| - An adjustment you make at closing is not reflected | | | | If you said you were going to move into the |
| on the HUD-1 settlement statement; | | | | property but you got a job transfer 2 days after |
| - Part of your down payment or closing costs comes | | | | closing then you have met the intent part of the law. |
| from work you will be doing on the property; | | | | You planned to live in the house when you bought it. |
| - For bond loans, if you get a substantial RAISE! | | | | As fate has it, a job transfer to another town 2 |
| - Any part of the down payment is borrowed; | | | | days later precludes living in the house. No fraud. |
| - You have had any significant job change, quit your | | | | Proving your intent is not always as easy as it |
| job or started a new job without telling the lender; | | | | sounds. Let's say you bought a house, closed on it, |
| - You don't move into the property when you certify | | | | and then the house of your dreams comes on the |
| to the lender you will be an owner occupant; | | | | market two blocks away. The price is too good to |
| The Real Estate Settlement Procedures Act (RESPA) | | | | pass up. Can you ive in the new house or do you |
| is very specific about how a closing should | | | | have to live in the old one? |
| proceed,especially one that is subject to financing. | | | | This is a tougher argument to make to an |
| Mortgage fraud is easy to fall into and hard to get | | | | investigator since it is difficult to prove your |
| out of. Even judges have fallen into the trap. For | | | | intentions. Should you buy the second house and risk |
| example, in Tampa Florida, Judge Thomas E. Stringer | | | | it? Assuming you have documented your path why |
| plead guilty on August 6th 2009 to bank fraud. He | | | | not buy the second house. However, if you do that |
| was helping a young dancer "protect" her assets. In | | | | 13 times over a few year period, as happened in |
| the process, he bought a house for her in Hawaii. | | | | Colorado recently, you are probably in hot water. As |
| Things went sour with the dancer of questionable | | | | a general rule, if you are not living in the house after |
| repute and the deal was reported. Judge Stringer had | | | | the first year, even though you certified you were |
| not been completely candid in his loan application. He | | | | going to live in the house, be sure you have your |
| failed to disclose he had borrowed all or part of the | | | | documentation ready! You could easily get called on |
| down payment. That is a big "no, no!" | | | | the carpet as occupancy is checked for many loans. |
| The Judge Stringer case stands for the proposition | | | | Unfortunately, everyone in the chain of a real estate |
| you don't have to go into foreclosure to commit | | | | deal, from the loan originator to the closing agent and |
| fraud. He was current with his loan payments. That | | | | the brokers and lawyers in-between, are potential |
| was not the problem. His only mistake was not telling | | | | fraudulent actors. For example, if the figures at |
| his lender he had borrowed the down payment. No | | | | closing are significantly different from the fees you |
| losses were reported by the lender! | | | | are being charged at time of settlement then you |
| In the simplest of terms, any statement made to the | | | | may be the victim of loan fraud. Be vigilant for fix |
| lender which is not 100% accurate may be | | | | and flips where sellers are making a huge profit on |
| considered fraudulent. Any change in the borrower's | | | | the house. In these cases, you will want to double |
| financial health, for example buying a car or incurring | | | | check the com parables and maybe even hire |
| extra medical bills without advising the lender, may be | | | | another appraisal company to check true market |
| fraudulent. Any decrease, and in some cases, any | | | | value. One has to wonder how a house worth |
| increase, in income without advising the lender may | | | | $400,000 a month ago is now worth the $550,000 |
| be fraudulent. For example, some loans are geared | | | | you agreed to pay for it. There may be appraisal |
| towards low income buyers. If the borrower makes | | | | games going on with the property. |