and you’d think by now title agents would STOP enabling or colluding to defraud lenders.
You know, younger, inexperienced, or stupid title agents might make the argument that they didn’t understand that having two settlement statements was mortgage fraud. Though they’d still be held accountable by authorities, someone might have believed them a year or two ago.
Now, anyone in this business who doesn’t know that sending a lender a HUD-1 that does not match up with disbursements is mortgage fraud is an absolute criminal or ignoramus and deserves to at least lose their license.
I had an interesting chat with a real estate agent in New York yesterday. Seems she represented a seller in a transaction which included a seller assist. All went well until the closing. The seller did not attend. The real estate agent also did not attend because the seller was represented by an attorney who said he would attend. Turns out he did not. For some reason no one on the seller side reviewed or approved the HUD-1 prior to closing.
Who signed the HUD-1 for the seller? Get this. The title agent signed for the seller and did so without authority.
The real problem is that the mortgage lender capped the seller assist and rather than contacting all parties to renegotiate the contract, this title agent created and signed a HUD-1 matching the mortgage lender instructions, THEN disbursed funds based on the contract.
WHAT? Yes, the HUD-1 was a total fabrication meant to satisfy the mortgage lender.
THAT, FOLKS IS MORTGAGE FRAUD.
The real estate agent, once she discovered what had happened has been demanding that the title agent either undo the transaction or remit the balance owed to the seller so that funds do match up with the HUD-1.
I suggested that she report the facts to the Attorney General, the FBI, the state insurance department, the mortgage lender and the title underwriting company, oh, and also the Dept. of HUD.
We need to clean our business of title agents who are unable or unwilling to walk the straight and narrow line of fidelity. We need to have ZERO tolerance for bad guys or we won’t get this situation in the mortgage market under control.
MORAL OF THE STORY FOR CONSUMERS: Control your transaction. Review the HUD-1 before you close and make certain that the movement of money is correctly shown. There is no such thing as “off HUD” disbursements. Anything paid outside of closing must be disclosed on the HUD-1 as POC so that there is a money trail. Do NOT allow a professional in the transaction to convince you otherwise. To do so is to collude to defraud a mortgage lender. I have no idea if the buyer in this transaction or their real estate agent knew what happened, but even if they did not, they can be held accountable for mortgage fraud.
Wow.
I know title agents are pretty much nobodies in the process, but unless someone gripes about his/her actions, wouldnt that sort of be an acceptance or affirmation of his actions?
Hmmm. well, the FBI thinks the title agent is the most important person in the business of stopping mortgage fraud at the closing table. Much of the forensic investigations in mortgage fraud points to the title agent as an enabler, if not an active participant.
Yes, once discovered, the fraud should be reported.
It definitely happens and everyone needs to be on their guard
Wonderful information to share with everyone and GREAT points to make. I do hope that title agent has been reprimanded.
OH my goodness! You did a great job highlighting how important it is to look over everything and not just assume it will be taken care of, both the buyer and the realtors! As fraud like this is caught, hopefully it will make more people NOT do it. The biggest lesson is to remember that there should ALWAYS be a money trail-if anyone starts telling you that they can “keep it off the books if they do it this way”-just walk away.
Title agent plays most important roles, and key person who can stop fraud, in such situation brilliant and very helpful article for both Realtors and Buyers.
Absolutely right. We as professionals should always follow up. It usually only takes a minute.
It definitely happens and everyone needs to be on their guard
Great story, I had the same thing happen to me!
Not good!
Did they buyers get to keep the property without the debt.?