Can a Mortgage Broker, Loan Officer, Bank, Mortgage Company, or Lender actually commit mortgage fraud, or are they immune to the same consequences than if a borrower committed the same offense?
After my schooling today by a former Sarasota, FL judge, I must answer NO THEY CANNOT COMMIT MORTGAGE FRAUD AND YES THEY ARE IMMUNE. Accordingly, once the borrower receives the proceeds of a mortgage loan at settlement, the broker, loan officer, lender, bank, mortgage company, etc. (henceforth, Lender) is absolved of all culpability in regards to the preparation of the uniform residential loan application (1003.) Why? Well, after all, the borrower received the money they asked for and that's the end of that. This is what I was told from a former judge's own mouth. Interesting... Got it so far? Good...
However, after further consideration of this logic, I can only surmise due to common sense and reasoning that fraud by the Lender could occur; but, only if it was discovered between the time of the loan application and the time of settlement. In this instance, the fraud would occur; but, would have to be discovered before any monies have been distributed to the borrower. You will see later that this can not happen. To sum things up, Lender fraud would occur at the time of the 1003 completion, but would be absolved at settlement when the funds are disbursed. Believe it or not, that's true, according to my first-hand information. How can we equate this to a narcotics dealer? Would the dealer only be guilty while transporting the narcotics? After delivery, would the dealer then become innocent? All things being equal; in both cases, after some sort of monetary conveyance is carried out, is the guilty party all of a sudden innocent? Was the Lender and/or the narcotics dealer guilty or innocent? Temporarily guilty? Do we treat them the same? So, now what happens? We know what would happen to the dealer. But, the Lender gets away with it scott-free?
BUT THINK ABOUT IT, the borrower does not complete the loan application, the Lender does. So how would the borrower be aware their loan application was compromised? or forged? or the fact that they were getting a conventional loan; when, in fact, they were getting a non-conventional loan? or that they even signed the application? Answer… they would not. That’s right, they would not know until some time in the future if and when the loan application was called into question, i.e. requested during discovery. At this point, the borrower would have time to uncover any discrepancies. And it is like pulling teeth trying to drag a 1003 from a Lender. Walk into your bank and ask for a copy of your loan application. Good luck. It won't happen. It can take years even with a court order. Ask yourself why?
The Double Standard: If a borrower commits mortgage fraud, i.e. falsifies their income on the 1003, they are subject to severe criminal as well as civil actions, see FBI standard below. However, if the Lender commits mortgage fraud, i.e. alters the borrowers income on the 1003, are they totally and absolutely immune to repercussions simply because they transferred funds to the borrower? It seems that way.
Read This*** FBI WARNING: "Mortgage Fraud is investigated by the Federal Bureau of Investigation and is punishable by up to 30 years in federal prison or $1,000,000 fine, or both. It is illegal for a person to make any false statement regarding income, assets, debt, or matters of identification, or to willfully overvalue any land or property, in a loan and credit application for the purpose of influencing in any way the action of a financial institution." What this tells me is that mortgage fraud is a more astringent crime than even murder. How many murderers get 30 years, or a million dollar fine? The average sentence in the US for 1st degree murder is 25 years in prison and a $0 (zero) fine. DOES THIS GO BOTH WAYS? Is the Lender a person? What do you think?
Is this a double-standard? I don't know, is it? It's my opinion that anyone with a double-digit IQ would clearly see the obvious. I need not say more. Do Lenders think they are God?
In my final conclusion, in spite of my schooling today by a not-to-be-named former Sarasota, FL judge, I propose that mortgage fraud CAN BE AND IS being committed by Lenders and should be punished according to FBI standards. Should compensation be granted to the borrower victim???
*** http://www.mortgagebankers.org/files/FBIMortgageFraudWarningFinal.pdf (please copy and paste into your browser.)
After my schooling today by a former Sarasota, FL judge, I must answer NO THEY CANNOT COMMIT MORTGAGE FRAUD AND YES THEY ARE IMMUNE. Accordingly, once the borrower receives the proceeds of a mortgage loan at settlement, the broker, loan officer, lender, bank, mortgage company, etc. (henceforth, Lender) is absolved of all culpability in regards to the preparation of the uniform residential loan application (1003.) Why? Well, after all, the borrower received the money they asked for and that's the end of that. This is what I was told from a former judge's own mouth. Interesting... Got it so far? Good...
However, after further consideration of this logic, I can only surmise due to common sense and reasoning that fraud by the Lender could occur; but, only if it was discovered between the time of the loan application and the time of settlement. In this instance, the fraud would occur; but, would have to be discovered before any monies have been distributed to the borrower. You will see later that this can not happen. To sum things up, Lender fraud would occur at the time of the 1003 completion, but would be absolved at settlement when the funds are disbursed. Believe it or not, that's true, according to my first-hand information. How can we equate this to a narcotics dealer? Would the dealer only be guilty while transporting the narcotics? After delivery, would the dealer then become innocent? All things being equal; in both cases, after some sort of monetary conveyance is carried out, is the guilty party all of a sudden innocent? Was the Lender and/or the narcotics dealer guilty or innocent? Temporarily guilty? Do we treat them the same? So, now what happens? We know what would happen to the dealer. But, the Lender gets away with it scott-free?
BUT THINK ABOUT IT, the borrower does not complete the loan application, the Lender does. So how would the borrower be aware their loan application was compromised? or forged? or the fact that they were getting a conventional loan; when, in fact, they were getting a non-conventional loan? or that they even signed the application? Answer… they would not. That’s right, they would not know until some time in the future if and when the loan application was called into question, i.e. requested during discovery. At this point, the borrower would have time to uncover any discrepancies. And it is like pulling teeth trying to drag a 1003 from a Lender. Walk into your bank and ask for a copy of your loan application. Good luck. It won't happen. It can take years even with a court order. Ask yourself why?
The Double Standard: If a borrower commits mortgage fraud, i.e. falsifies their income on the 1003, they are subject to severe criminal as well as civil actions, see FBI standard below. However, if the Lender commits mortgage fraud, i.e. alters the borrowers income on the 1003, are they totally and absolutely immune to repercussions simply because they transferred funds to the borrower? It seems that way.
Read This*** FBI WARNING: "Mortgage Fraud is investigated by the Federal Bureau of Investigation and is punishable by up to 30 years in federal prison or $1,000,000 fine, or both. It is illegal for a person to make any false statement regarding income, assets, debt, or matters of identification, or to willfully overvalue any land or property, in a loan and credit application for the purpose of influencing in any way the action of a financial institution." What this tells me is that mortgage fraud is a more astringent crime than even murder. How many murderers get 30 years, or a million dollar fine? The average sentence in the US for 1st degree murder is 25 years in prison and a $0 (zero) fine. DOES THIS GO BOTH WAYS? Is the Lender a person? What do you think?
Is this a double-standard? I don't know, is it? It's my opinion that anyone with a double-digit IQ would clearly see the obvious. I need not say more. Do Lenders think they are God?
In my final conclusion, in spite of my schooling today by a not-to-be-named former Sarasota, FL judge, I propose that mortgage fraud CAN BE AND IS being committed by Lenders and should be punished according to FBI standards. Should compensation be granted to the borrower victim???
*** http://www.mortgagebankers.org/files/FBIMortgageFraudWarningFinal.pdf (please copy and paste into your browser.)
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