Banks Now Promoting Mortgage Fraud

By
Real Estate Services with Marte Cliff Copywriting

Mortgage fraud is on the Upswing, but not from the usual sources...

Wouldn’t you think that with all the uproar over mishandled foreclosures the banks would be trying to follow the letter of the law? At least with regard to loans, if not with handling offers on REO properties.

 

While doing research for a copywriting client the other day, I came across a short blurb saying mortgage fraud is on the upswing. So I decided to find out more.

Since banks are demanding stricter documentation these days, and since appraisers are being super careful lately, I didn’t think they were talking about “liar loans,” but I had to see.

It turns out, they were talking about short sales, and banks that hold second mortgages.

cashBecause the bank that holds the first mortgage gets to decide how many dollars that second lien holder will receive from the sale, those second lien holders are attempting to extort a few extra dollars illegally.

They do have the power to refuse to release their lien so the short sale can close. And they’re using that power to demand “under the table” payment. Often they don’t care if it’s the seller, the buyer, or the real estate agent who pays them. What’s important is that it doesn’t show up on the HUD-1.

They don’t want the first lien holder to know they’re getting the money.

Of course it’s illegal. And of course real estate agents who participate could lose their licenses. But that’s not the bank's concern. They just want the money.

How did we get to a point where banks are above the law?

 

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Rainmaker
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Marte Cliff
your real estate writer
Marte Cliff Copywriting

Linda - Yes, that makes sense. Since our politicians and others in government positions are also above the law.

It does tickle me when one of them steps so far out of line that the courts are forced to punish them. Not that I want them to continue criminal behavior, but that I want somebody with enough power to step up and say "You can't do that."

June 28, 2011 05:36 PM
Anonymous #24
Anonymous
Paul

After waiting as a buyer for 11 months, the final and best solution, the so called seller's short sale expert came up with was an under the table payment to a sceond lien holder. At points things were not handled in the best way by the seller and seller's agent, but we were patient and accepted that it could take over a year to take possesion of the property. We were simply incredulous, when the final solution of so many months involved mortgage fraud. The feeling we recieved, is that we are not going along with the way things are comonly done, and we just must not want the property. We love the place, but I educated myself, and in no way want to be involved in an illegal transaction. My wife and I are very patient and introspective people, but this is enough to be infuriating for anyone.

 

May question is this. If this agent has closed many sales. Is he ignorant or unethical if he does not realize the magnitude of the fraud proposed?

July 20, 2012 07:01 AM
Rainmaker
748,177
Marte Cliff
your real estate writer
Marte Cliff Copywriting

Paul - My opinion would be that the agent is just unethical enough to stick his head in the sand and say "If the bank says it's OK, then it's OK."

In other words, he doesn't want to look at the magnitude of the fraud.

July 20, 2012 09:07 AM
Anonymous #26
Anonymous
Paul

Thank you very much for the response. It is suprising what people can convince themselves of when money is involved. Slowly and surely this will become a better process. Thank you for bringing attention to this issue.

July 20, 2012 10:25 AM
Rainmaker
748,177
Marte Cliff
your real estate writer
Marte Cliff Copywriting

Paul - The banks are good at "illegal" as we've seen through the robo-signing scandal. And that's just the tip of it. They're foreclosing on people without even knowing who owns the note. They forge signatures when it suits them, too.

But it's not new. They feel they're above the law - or it doesn't apply to them. When I was an agent I handled bank owned properties and they absolutely refused to follow state law with regard to offers.

I'd like to think it will all get better, but I'm not at all convinced that they're even trying to make it better.

July 20, 2012 11:18 AM
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Author Bio: Marte Cliff is a freelance copywriter who specializes in writing for the real estate profession.

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