I am not a loan officer, so I apologize if I don’t no all the exact details of how this goes down. I apologize if you feel I was “exagerating.” I have heard this straight from 3 different lender’s mouths, exactly as I told it, so perhaps they were exagerating. It is not my goals to pass on misinformation.

I do know from first hand experience one instance when a P&S (legitimate) was accepted by a lender in order for the loan to meet a funding condition- perhaps this is not the most common situation, but I know it does happen.

All and all, I believe the sitaution I described is more common with Lease Agreements then P&S agreements… but once again I am not a lender.

For the record, lenders will request HUD of current home sold. P&S won’t get you past that. As for lease agreement, there are many “legitimate” lease agreements that renters back out on. PLus there are other ways to get around lease agreements, market rent analysis are often accepted. Don’t over-exaggerate the story…

Dont’ confuse signing closing documents (loan paperwork, etc.) with actual closing which is when your transaction is recorded at the county(THE closing). Signing your paperwork is typically a day or two or three prior to your closing/settlement date.

In Washington State, signing your paperwork is generally done at the escrow office and then we take it from there.

Guess what happens when you participate in or are aware of forged legal documents and try to pass them by our crack fraud squad?

First, your transaction may be taken all the way to the day prior to closing while we work hehind the scenes with local law enforcement and Washington State Attorney’s office in conjuction with the Dept. of Financial Institutions and then you may get a nice visit from some people who have very large initials on their navy blue jackets.

Second, Notaries and loan officers who think they are doing a favor for a friends in committing signature fraud (like signing for other people who are not a party to a transaction)are likely to also join in on the fun.

I speak from experience.

Fraud is alive and well.

When I’ve closed in CA, it’s been done by the Escrow Company at their office with their agent – be pretty hard to forge.

Back to mortgage brokers… this is so common. I have met with two brokers (who shall remain nameless) who have “implied” (not enough to convict or turn them in) that they forge documents to get people loans. Usually, it goes something like this: Someone wants to buy a home. They can’t afford to carry 2 mortgages. The Seller of their dream home won’t take a contingent offer. The mortgage broker over promises what they can do. The mortgage broker, under pressure to get the loan done, forges a purchase and sale or lease agreement for the buyer’s original home. The lender thinks the first home is sold or rented, and gives them the loan for the new home.

I won’t touch these brokers with a 10 foot pole, but believe me its more common than you think. Next year, Washington will come into the 21st century and begin licensing loan officers. Maybe that will help.

From Business Week:

The Treasury Dept.’s Financial Crimes Enforcement Network recently announced that “suspected mortgage loan fraud in the United States continues to rise, and has risen 35 percent in the past year.”

Of course, it’s probably much worse than that.

Yeah, this is probably only a random occurence. Nothing to worry about.

If it were just one criminal perpetrating these crimes in King County, and if she managed to handle about 3 sales/month, then that’d account for 1/10th of 1% of all sales. 10 people running this scam at roughly the same rate, then that accounts for 1% off all closed sales. Each criminal would create about a million per month in fraud (assuming a sales price of $333K on average). If that goes on for 6 months, spread across 10 con artists, you’re talking $60 million in bad debt.

A few million here, a few million there, pretty soon, you’re talking about real money.

They even posted a link to your blog tim…

“A Seattle real estate investor discovered last night the petrified corpse of a fried dead rat baking on the heating element in his new condo. This will come as unwelcome news to certain gloom and doom real estate haters because it demonstrates that the Seattle market remains bubble proof. When you look at other real estate markets outside of Seattle – Darfur, Glod, Buffalo – first time home buyers have to a pay a premium for condos that come with fried rat carcasses.

Seattlest recommends that before you flip that condo, be sure to flip the rat over to the other side to let it bake some more and attain a tighter, translucent, Beef Jerky(TM) like texture, since you’re not going to be able to afford groceries with a mortgage like yours. But be gentle! Don’t be like our Seattle real estate investor who “flipped” overzealously, thereby causing the crunchy, rat corpse amenity to snap in half.”

The people who got screwed the worst were not the people who moved into a home and found out it wasn’t theirs, it was the other people (former clients of the broker) who suddenly discovered that they were in default on a house they did not even know was theirs! Imagine trying to explain that to the creditors on the phone: “honest, I had no idea that I bought that house”–who’s going to believe that?

And the mortgage broker, being the nice person that she is, even offered to collect the mortgage payments from the new owners–and we know where that $ went too.

These were all first-time homebuyers who were unfamiliar with the process and didn’t do their homework. I do have some sympathy for them, but cheeze and crackers, people, when you’re going to make the biggest purchase OF YOUR LIFE, crack open the internets for half an hour first!!!!