Going back to the original example discussed earlier in this article, the seller and the listing broker working together to make the comparables look better than they truly are could also be seen as mortgage fraud based upon the ruling in the Gilford case.
So, what are the penalties for mortgage fraud? Georgia law provides that violators are guilty of a felony and shall be punished by imprisonment for not less than one year or more than ten years, by a fine not to exceed $5,000 or both. Participating in a pattern of mortgage fraud increases the penalty to not less than three years nor more than 20 years, by a fine not to exceed $100,000 or both. Each instance of mortgage fraud is seen as a separate violation.
The 800 pound gorilla in the room that has not yet been discussed is that underwriting standards are, in some cases, so conservative, it is easy to rationalize gaming the system to get a loan approved. However, with mortgage fraud being a felony in Georgia, this is not an area where prosecutors are likely going to be forgiving of even the smallest white lies. Sadly, underwriting standards will likely only be loosened when loan officers start to lose deals to lenders with more reasonable underwriting standards. Then pressure will be brought to bear on the underwriters to be more realistic. Of course, with REALTORS and mortgage lenders alike, relying on fewer deals to feed their families, no REALTOR or loan originator wants to see any loan not be approved.
Our mortgage fraud statute was written at a time when mortgage fraud was rampant. Mortgage fraud is in the same category of crimes as murder, assault and bank robbery. Our Legislature wrote a law that criminalizes even the slightest deception of the lender and puts anyone who either knew of or participated in the deception at great risk. To protect our industry and ourselves, REALTORS must use extreme care to comply with the law. REALTORS should not take comfort in the fact that others may not be following the strict requirements of the law. As my mama used to say, “Just because 64,000 people are doing a stupid thing, it still makes it a stupid thing.”
SETH G. WEISSMAN IS GENERAL COUNSEL TO THE GEORGIA ASSOCIATION OF REALTORS. HE IS ALSO AN ADJUNCT PROFESSOR OF CITY PLANNING AT THE GEORGIA INSTITUTE OF TECHNOLOGY.
www.garealtor.com GEORGIA REALTOR I 19
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