So, for example, if the loan is made in Georgia but the secured property is located in South Carolina, the Georgia statute does not apply. Similarly, if a buyer is getting a mortgage on an office building or retail center, the Georgia law does not apply.
In Georgia, a person commits the crime of mortgage fraud when he or she, with the intent to defraud, does any of the following:
( 1 ) Knowingly makes any deliberate misstatement, misrepresentation, or omission during the mortgage lending process with the intention that it be relied on by a mortgage lender, borrower, or any other party to the mortgage lending process;
(2) Knowingly uses or facilitates the use of any deliberate misstatement, misrepresentation, or omission, knowing the same to contain a misstatement, misrepresentation, or omission, during the mortgage lending process with the intention that it be relied on by a mortgage lender, borrower, or any other party to the mortgage lending process;
(3) Receives any proceeds or any other funds in connection with a residential mortgage closing that such person knew resulted from a violation of paragraph (1) or (2) of this Code section;
(4) Conspires to violate any of the provisions of paragraph (1), (2), or (3) of this Code section; or
(5) Files or causes to be filed with the official registrar of deeds of any county of this state any document such person knows to contain a deliberate misstatement, misrepresentation, or omission.
WHAT THE LAW MEANS
So, what does the above statute mean when applied to real world situations? Let’s go back and re-examine the two examples above. A mortgage loan originator is asking a REALTOR not to provide the loan underwriter with an amendment to the real estate contract that is required to be provided to the mortgage lender. The question the REALTOR should be asking is why does the mortgage loan originator want the REALTOR to do this? If the answer is that the loan originator wants to hide the amendment because giving it to the loan underwriter may cause the loan to be denied, the REALTOR has just heard a great reason to provide the amendment to the underwriter, if he or she values not going to jail. If the REALTOR intentionally works with the loan originator so that the loan underwriter does not get information required by the lender in the mortgage loan application, it gets way too close to the line where the REALTOR is facilitating “the use of any deliberate … omission … during the mortgage lending process with the intention that it be relied on by a mortgage lender … ” It also sounds like the mortgage loan originator and the REALTOR might be conspiring together to violate our mortgage fraud laws.
What is most troubling about the scenario discussed above is that the person asking the REALTOR to withhold information from the underwriter works for the mortgage lender. Obviously, when loan originators and loan underwriters have differing goals and are working at cross purposes it is not in the best interests of the mortgage lender, the borrower or the REALTOR involved in the transaction.
Can a mortgage lender ever possibly be defrauded when a mortgage loan originator who works for the same lender is the one asking that information not be provided to the loan underwriter? While there is no case on point, the broad language of the mortgage fraud statute leaves open the possibility of this type of prosecution. Certainly, if the mortgage loan originator later denies advising the REALTOR to withhold the amendment or denies even knowing about the amendment the REALTOR could be left to hang out to dry if the REALTOR cannot prove otherwise.
In defense of mortgage loan originators, part of their job is to present information to underwriting in a way that is most likely going to get the loan approved. They are also under tremendous pressure from REALTORS to find a loan for every buyer of every property. In being advocates for getting loans approved, it is not surprising that some mortgage loan originators might occasionally view their own lender’s requirements as guidelines.
The key question in this discussion is where is the line between lawfully assisting the borrower in putting his or her best foot forward and unlawfully misrepresenting or omitting material information that could affect whether or not a loan is made?
Some REALTORS have argued that so long as the initial contract between the parties is provided to the lender, there is no need to provide amendments to the lender. Other REALTORS have stated that they only provide the base contract to the lender and do not even worry about providing exhibits to the purchase and sale contract to the lender. The smart answer in this area is to determine what information the borrower is required to provide the mortgage lender, and if the REALTOR is helping get this information to the lender, to ensure that required information in the REALTORS ’s possession is given to the lender.
16 I GEORGIA REALTOR JULY I AUGUST 2012
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