Legal Ease
MORTGAGE FRAUD
REVISITED
A REALTOR friend of mine was recently told by a mortgage loan officer that he did not want to see the GAR Form “Amendment to Address Concerns With Property” signed by the buyer and seller. Surprised, my friend asked if her buyer was not obligated to provide all amendments to the purchase and sale contract to the mortgage lender. The response of the mortgage loan originator was that the REALTOR could do whatever she wanted but providing the amendment might create issues in underwriting and cause the lender not to make the mortgage loan on the property. My REALTOR friend was concerned that not giving the lender all of the amendments to the purchase and sale agreement might be mortgage fraud. However, she was not sure and needed the transaction to close to pay her bills. In the end, she chose not to provide the amendment to the purchase and sale agreement. She rationalized her decision by convincing herself that the loan originator was an authorized representative of the mortgage lender and could thus speak for the lender.
In the same week, another REALTOR posed a different question about mortgage fraud. In an all cash deal a builder wanted to show the sales price of the home at $1,250,000 and then provide a credit to the buyer of $250,000. The builder wanted to do this so that his other houses would appraise at a higher sales price. The REALTOR wanted to know if this could possibly be mortgage fraud even though no mortgage was being originated as part of the transaction.
As our residential housing market continues to strengthen, REALTORS are getting busier and questions about mortgage fraud are again beginning to arise. Since mortgage fraud was part of what helped kill the goose that laid the golden egg in terms of undermining our housing market, it is important that we all be vigilant in stopping mortgage fraud. This article will review our residential mortgage fraud laws to help ensure that no REALTOR unwittingly ends up on the wrong end of an unwanted criminal prosecution.
THE LAW
The Georgia Residential Mortgage Fraud Act (O.C.G.A. § 16-8-101) only applies to residential mortgage loans. Under the statute a residential mortgage loan is one that is secured by a deed to secure debt or mortgage upon any interest in a one to four family residential property located in Georgia.
14 I GEORGIA REALTOR JULY I AUGUST 2012
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