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Real Estate News and Advice |
November 11, 2009 |
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 Mortgage Bankers Begin Self-Police Campaign
by M. Anthony Carr
I had a colleague call me with a peculiar, but unfortunately, not so uncommon story about how several lenders were asking her to provide false information on her mortgage application. As she is wanting to move into a new home first, then sell her current home, she would need what is called a "bridge" loan, where she would make payments on both houses with one loan until the old home is sold. A bridge loan isn’t used that often, but even so, three of four lenders she talked with asked her to supply them with a letter stating that she and her husband had rented out the first home and thus the loan would be approved. One problem – there was no renter. It would be a complete fabrication. A single parent I know was asked by her then-separated husband to write a letter stating she was receiving less money per month for spousal and child support than she actually received, so that the estranged spouse would be able to qualify for a larger loan. The borrower was prompted to get the letter from his wife by his loan officer. Both of these are instances of fraudulent loan practices. Bottom line – the loan professionals aren’t acting very professionally and are putting their customers at risk if their loan application ever gets audited. Of course, the borrower is the one submitting both of the documents, so the burden of proof falls on them to prove it’s true. Saying to an investigator "the loan officer made me do it," just won’t cut it. The Mortgage Bankers Association of America recently launched an education campaign called Stop Mortgage Fraud. The campaign has elicited endorsements from both the U.S. Conference of Mayors and the Department of Housing and Urban Development. The examples above fall in the first sign of fraud: Were you encouraged to include false information on your loan application? Below are a few more of them, that could point to fraudulent practices by the lender. Obviously, at times, there is human error involved in a the loan application process. When you’re faced with a couple inches deep of papers to sign, it’s not unusual to glide over a form without getting a signature in place. A busy lender may have a form missing from his package that he didn’t know was missing, thus asking you to fill it out later. However, If their mistake ends up costing you money – that could be a sign that the missing signature or paperwork was intentional to unfairly push up their profit margin at your expense. If you think you’ve been victimized by an errant loan officer, you’re no longer out of luck. MBAA has established a Web site where consumers can report abusive lending practices. Visit www.stopmortgagefraud.com or call 800/348-3931 to get information on what steps to take to file a complaint. Soon to come is a Spanish version of the campaign promoted by the Mortgage Bankers Association of Puerto Rico. Published: June 21, 2002 Use of this article without permission is a violation of federal copyright laws. 
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Mr. Carr is an award-winning real estate broker in Northern Virginia and authored "Real Estate Investing Made Simple: a commonsense approach to building wealth." He also contributed to Donald Trump’s book, "The Best Real Estate Advice I Ever Received," and is an active trainer and coach of top producers in the Washington DC market. As a sought-after expert on real estate, Mr. Carr has been featured on CNN, various broadcast outlets and was the former real estate editor for The Washington Times. He accepts questions at his blog