You want my Sellers to do what?

Hi folks! Well, today, I received another of those fraudulent offers for one of my listings. Do you get as tired as I do of getting these things? It really leaves a bad taste in my mouth for our profession. When folks hire a REALTOR® they should be assured that they will not be participating in mortgage fraud. Mortgage fraud is a disgrace to our industry and it makes me mad.

A REALTOR®, called me yesterday, to let me know she was sending over an offer. She gave me a heads up that the offer was written with the Buyer needing a "gift of equity" from the Seller. Gift of equity? What the hell is that? Anyway, I told her to send it on over and I would take a look at it. My curiosity always gets the best of me and I get excited about seeing the new "fraud du jour" technique. I figure, if nothing else, it's good blog fodder. So keep them coming!

Well this one was a doozie!!! Here are the details: My listing is priced at $149,000. The offer was for $165,000 on a FHA loan with the Seller "gifting" through a non profit "church" $30,000 to the Buyer to be used for down payment, closing costs and to pay off some credit judgments. There was an added addendum stating that the "real" purchase price was $135,000 and the commission would be paid on that amount. Is that beautiful or what?

The Mortgage Broker called me to explain all this to me and to let me know I also needed to go into the MLS and raise the list price to $165,000 so it would not affect the appraisal. BUT this is no big deal because they do this ALL the time. Well being the good little Broker that I am, I told the MB and the REALTOR® that I had submitted the offer to my "Fraud Compliance Company" for review and as soon as I heard back from them I would get back with them. You think they were getting nervous yet?

If that wasn't enough, I sent this Email over a little later:

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The offer that you have presented for XXX Bluewood Dr has been rejected out right.

As mentioned to you earlier, this offer was presented to my Fraud Compliance Department for review and has been rejected as an attempt at committing Mortgage Fraud as per the HUD and FHA guidelines. I will assume that you are not aware of this and I will not report it to the proper authorities, this time. However, if I see any offers of this sort in the future from your office I will report it to the Attorney General, FREC and the FBI. Mortgage Fraud is a federal offense. By participating in this you are jeopardizing your license and your freedom.

There are numerous red flags in this purchase offer and as a licensed professional you should know that. If you are doing deals like this you need to stop. Mortgage Fraud is a disease in our industry and it destroys lives. This contract is not in a "grey" area. It is an attempt at fraud, whether knowingly or unknowingly. My Fraud Compliance Officer is one of the leading experts on Mortgage Fraud in the country. At a minimum:

  • The FHA does allow down payment assistance from a 3rd party entity. BUT they will not allow an exorbitant amount of $30,000(18%) This is fraud.

 

  • Requiring me to change the MLS list price for appraisal purposes, is fraud.

 

  • Having an addendum to the contract with a different purchase price on it, is fraud.

Here is a link to the FHA guidelines for you.

FHA Guidelines Sec. 3 relates to this.

My suggestion is you distance yourself from this lender. You also need to get education related to fraud and learn how to recognize it. Please accept this email as a professional courtesy and a wake up call. I have forwarded this to the lender but have not forwarded it to your Broker, yet. This is a serious matter and should be handled accordingly.

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Man, I LOVE my job!!!! How did I do?

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