Other Sources of RE Fraud
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Income MisrepresentationsRepresentations occur when a borrower falsifies their income or employment to qualify for a loan. This type of misrepresentation is often associated with stated income loans and flipping. Buyers for housing or for profit engage in this activity. The prior engage in acts of misrepresentation to qualify for a larger home and the latter to qualify for a larger loan. A red flag is where a buyer makes an unrealistic income in relation to their profession/occupation or a drastic increase of income due to raise or new job.
Asset Misrepresentations... continue reading >>
Illegal Flipping
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Property falsely appraised at a higher value and then quickly sold. What makes flipping illegal is that the information obtained for the appraisal is fraudulent. Red flags include doctored loan documentation, appraisals that do not contain photographs of the interior, appraisals that do not match the home inspection report, the home inspector and the appraiser are the same, inflation of the buyer’s income, payments to investors, brokers, appraisers, title companies, or inspectors at close.
Homes subject to flipping are often times appraised at twice the market rates. Another common problem is that the buyer, seller or other insider... continue reading >>
Occupancy Fraud
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If you’re a real estate investor, or simply own more than one property, it’s imperative that your bank statements are mailed to your primary residence each month. If you claim one house to be your owner-occupied property, but your bank statements and other financial materials are currently going to another one of your properties, the underwriter will surely question the occupancy, and your mortgage application will likely be declined.
In the eyes of the bank and the investor, it doesn’t make sense for a borrower to send bank statements, cable bills, and other financial statements to a property... continue reading >>
Unauthorized Practice of Real Estate
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Greetings from the Real Estate Legal Wizard!
Today I attended a seminar in Columbus with Colin. The topic was the unauthorized practice of Real Estate.
For years I have been telling my investor clients that many of their practices and daily activities are in violation of the Statutes governing the Licensing of Real Estate Brokers and Agents. Today, the enforcement attorney simply verified a long standing rule that she clearly outlined:
You cannot convey any interest in Real Estate that is greater than that which you already own.
Long Story shortened: Bird-dogging is... continue reading >>
Stated Income Loans and Misrepresentations
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I have to tell you that mortgage fraud is a scary thing! What is even more frightening, it that many real estate professionals find themselves the unknowing participants in a scheme to defraud. Some buyers call it cash back at close, others call it creating money, and yet others call it creative financing/real estate techniques. The unfortunate bottom line is that most are illegal.
There are many common fraudulent activities that occur in the market. And to be frank, there is not enough time or space to discuss each one of them. But I... continue reading >>
Asset Protection and the Fradulent Conveyance
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Protecting your assets is an important consideration for any business owner. If done in conjunction with an estate plan, your protection plan can prevent outside attacks against your personal wealth.
Oftentimes, individuals wait until they are facing litigation, loss, or some tragedy, before transferring their assets into a protection vehicle. Unfortunately, when you wait until you have actual knowledge of problems; clever lawyers can use a cause of action called the fraudulent conveyance to get at your wealth.
A conveyance is generally considered fraudulent as to a creditor when the transfer was made without fair consideration... continue reading >>
Paying Off Your 30 Year Mortgage in 8 Years
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I am sure that many of you have seen the advertisements that promise to help you pay off your 30 Mortgage in 8-11 Years. Since there seems to be a little bit of confusion on this program, I thought I would address it briefly.
The programs are generally called Money Merge Accounts. This product basically is a complex line of credit on your home/property. The account works like a checking account and has a relatively simple open interest calculator built in. The account determines the interest based upon the outstanding balance on the account. ... continue reading >>
4 Tips When Starting Your Business
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I must receive at least ten emails a week from investors and potential business owners that ask me why they are in the trouble they found themselves in. Jon I got sued, am in foreclosure, getting divorced and my asets are in jeopardy. I thought I did everything correct, followed the advice from a book, but now the other side's lawyer attached my assets!
If you are a typical investor, you probably got your start, your motivation form an infomercial, boot camp, or seminar, dropped several hundred dollars to several thousand, learned a fast technique and... continue reading >>
