Unethical mortage lender? - Posted by Brett Schuler

Posted by Brett Schuler on May 22, 2006 at 17:13:14:

Thanks River City. I have insisted from now on to communicate with them via email and since that point have heard virtually nothing from them. They tried to correct their mistake by restructuring it to a normal purchase where I pay closing costs. The problem is that on the settlement statement, I am paying closing costs of $16,900 and there are only $13,000 in actual closing costs. The buyers are getting $4k back in cash with no down payment. I asked them via email why I am paying more than the actual closing costs and they have not responded. I told the loan officer that this smells fishy and that I don’t feel comfortable going forward. He called me dishonest and tried to pressure me into signing. I have all the documentation needed to report this.

Unethical mortage lender? - Posted by Brett Schuler

Posted by Brett Schuler on May 18, 2006 at 13:08:56:

I am selling a house to my lease option tenant and am worried that the loan officer and title company are trying to sneak something by me and may be committing mortgage fraud.
The purchase price in the contract is 223,100k and the appraisal of the home is 300k. I was told that the funds were already at the title company. I was ready to close and send back notarized deed & settlement statement. When I received the documents, the HUD settlement statement said that there was a purchase price of $300k with an equity credit of over $70k. There was also a 1099-s form that has “gross proceeds” of $300k. I contacted the loan officer and told him that I thought overstating the purchase price was against the law, and regardless, I cannot sign due to increased tax liability. The loan officer played dumb and said that he was not sure why it got set up that way. He said that since they are a direct lender, they are allowed to set it up like a refinance. He then told me that he could structure it as a purchase price of $240k and I pay $16,900 in closing costs (7%). I said, I would consider it and check to make sure it worked out for me tax-wise. The very next day, they sent the adjusted HUD Settlement Statement. The 1099-S form still said $300k, but I asked him to change it to $240k and he did that for me.
This has thrown up a lot of red flags for me.
My quesitons are:
Is what they are doing legal?
How can I assure that after I sign the documents, that they do not submit the previous settlement statment and 1099-s form of $300k?
I am worried that they have changed some paperwork around for me, but they are really funding it based on the $300k purchase price.

Find Another Lender - Posted by River City

Posted by River City on May 22, 2006 at 11:34:04:

What they are asking you to do is illegal and you could get into BIG trouble if you go through with this. You have a purchase agreement and all closing documents should reflect the terms of the purchase agreement. You should report this broker to the licensing authorities for fraud. Be sure to keep all documents you have received that support the fraud. I would also suggest that you keep a log of your conversations with this broker…and, terminate your relationship with the broker (in writing).

Re: Unethical mortage lender? - Posted by BTI

Posted by BTI on May 20, 2006 at 16:08:34:


Looks like the mortgage guys are working with the tenant to get a 100+ financing deal and want you to join the fraud by signing documents which misrepresent the situation. Don’t do it.