Mortgage Fraud is Serious Business

Meet your new neighbor . . . . . The FBI

The FBI and The Office of Homeland Security have combined their efforts to investigate and fight mortgage fraud. The issues have become so serious that the FBI has opened field offices in a number of locations to get people in the community in the most critical locations in order to investigate mortgage fraud.

Builders, Developers and Sales Professionals have become a prime target

As the market has tightened the number of cases of mortgage fraud continues to increase with sales professionals, builders, and developers facing exposure in several areas.

The numbers of arrests are increasing. The following information is part of the recent arrests.

Model lease back – For years builders have leased back models. In reality there have been very little issues with model lease backs. Now the practice of model lease backs is being challenged by the FBI.

To protect yourself the lease and financial arrangements of the model lease back has to be part of the contract with complete disclosure to all parties including the lender. Failure to disclose is mortgage fraud.

Hotel condominiums – Lease backs or guaranteed of rent or cash flow. If there is any money being given back to the buyer’s in the transaction full disclosure has to be made to all parties including the lender. Failure to disclose is mortgage fraud.

Inflated sales prices – Where there is the intention of giving cash back to the buyer that is not disclosed is mortgage fraud.

Bulk sales – Many builders are resorting to bulk sales to reduce their quick delivery homes or standing inventory. If there are any financial arrangements of cash back or guarantees there must be complete disclosure in the contract. Non-disclosure results in mortgage fraud.

Cash back at closing – Non-disclosure of cash at or after closing is mortgage fraud.

Lack of knowledge is not a defense – The FBI will not accept the defense that you didn’t know.

Bad advice is not a defense – You are on your own if you receive bad information or legal advice. That will not be a defense.

If cash is given back to the buyers at or after closing without full disclosure it’s considered mortgage fraud.

If it doesn’t feel right it’s not.