For some reason, Utah has always been toward the top of the list when it comes to ranking the states by the level of Mortgage and Real Estate fraud. Well, all that is about to change. Utah has passed (and the governer has signed) tough new legislation to deal with these issues. Honest RE professionals are, quite frankly, very excited about the new legislation. Not only does it level the playing field (for those who do business ethically,) it brings back dignity and respect to an industry that has seen its share of charlatans of late.
Under the old laws, the only people who could be prosecuted for RE / mortgage fraud were licensed RE / Mortgage professionals. Utah Division of Real Estate Director, Derek Miller had this to say to a Utah Senate committee: “[Under the old law] it would be equivalent to someone being involved in a hit and run, and when the police officer pulls the person over and says, ‘Let me see your license,’ and the person says, ‘Well, I didn’t bother to get a driver’s license.’ The polices officer then says, ‘Well, in that case, I can’t do anything to you.” Absurd as it sounds, that was the law in Utah. (On the other hand, if you weren’t licensed, the worst that could happen was to recieve a “cease and desist” order.) Perhaps even worse than that, professionals who were convicted of fraud were at risk of recieving a maximum penalty of $2,500. When fraudulent RE flips often netted a quarter to half a million dollars, the downside risk of a paltry $2,500 is negligible.
The bill also authorizes the hiring of investigators to look into the fraud issues, and requires background checks of out-of-state broker applicants, just as they do for those from Utah.
This is a huge step forward for Utah and the RE / Morgage business in the state. Stay tuned for more info on this important issue.
ABOUT TIME!
I recently had a buyer that specializes in “flipping” properties ask me what the concession was TO HER from me as the loan originator.
I told her that this was illegal, and she promptly replied, TOO BAD for you. She would get her loan from her regular loan officer that always sends her at least $2,000 back on every deal.
Recently a friend (so I thought) of mine told me that she was a short sale specialist and that she could help me with my home. I was only a little over month behind due to some excessive bills that I had at the time. Rather than letting me know that I could catch up on the back payments, she told me that she would help me do a short sale by purchasing my home. She said that she would negotiate with the bank to try and get me 50 cents on the dollar for my house. Her payment for helping me would be $20,000. Otherwise, I was told, I would loose my home to foreclosure. She told me I could not trust any other short sale specialist and she was doing short sales to help people and not for the money.
From the beginning she told me she was licenced, had a team of people behind her as support, had a high powered lawyer to turn to, had already qualified for my house and last but not least, I did not have to continue to make any payments to my mortgage company. None of that was true. Over the following weeks things only got worse. At that point and time I felt I was at her mercy knowing that she had lied to me, did not know what she was doing, but had little recourse on solving the situation.
If it were not for retaining a lawyer, I would have lost everything. Less than one week before my home was to go into full foreclosure my friend said that she was going to purchase my home. Only three days before, she left a cold message on my phone saying that she had decided not go through with it. Thankfully, the lawyer was able to work out some extra time for the back payments (and fees associated with it) to be paid and my house was saved.
I felt anger, betrayal and disgust at the total disregard she had for me and my well being. This is a woman who she herself had lost a home to foreclosure a few years ago due to divorce. I could not understand how she could not only be unfeeling to the terrible situation she put me in, but didn’t even have the decency to apologize for the pain and suffering I have endured because of her.
It is now my mission to inform as many people as possible to the unknowledgeable, inexperienced and unlicenced people who are taking advantage of others who are vulnerable.
There is a tremendous amount of mortgage fraud but there is also a lot of borrower fraud, and has been.
How many of those stated income loans were liar loans?
And, how many people thought they’d get rich buying real estate no matter how onerous the loan. They figured they’d flip and make big money.
So the fraud is on both sides. In fact, I would venture to say this is part of the mortgage fraud Wall Street fraud greed that has created huge incentives to simply manipulate assets in order to get rich. The business of Main Street became the business of Wall Street, if you will.
regards
–Richard