Here is some information about fraud that could save some of you from a lot of trouble. If you have not had borrowers ask you to sign their names to expedite a transaction, you likely will. A situation will arise such as when a loan is supposed to close or fund and a document is conditioned at the last minute requiring the borrower's signature.
Then it will go something like this:
The borrowers are busy at work, on vacation, etc., and ask you to sign their names. They say it is OK because they know about it and give you permission. You might reason that it is OK, too, as the borrowers appear to be giving you their permission for their benefit.
Not good - the legal implications could cost you your job or land you in prison. Here are a few situations that have happened to people with whom I have spoken:
Situation Number 1
An owner of a large mortgage company was handling a loan for a friend of 10 years. It was a a new purchase and had to close by a certain date. The borrower was on vacation , and a condition came for a new, signed 1003 loan application. The loan officer called his longtime, trusted friend and told him about the condition. The borrower urged the officer to sign the application for him to close the transaction. The loan officer signed it, the loan closed and the borrowers moved on.
Shortly after closing, the borrowers had financial difficulties and could not make any payments on the loan. The lender audited the fire and found inconsistent signatures. The loan officer had a large company, and the lender knew it well. The lender told him it believed the signature was forged but that it would not take any action if payments were made every month. The loan officer ended up making all the payment himself for one year on a $700,000.00 mortgage until he had financial difficulties and could not pay it any more.
"Employers don't like
to encounter the word
'fraud' when conducting
a background check."
Long story short: The lender turned the case over to the Feds, and the loan officer now is serving 18 months in a federal prison 1,200 miles from his wife and kids.
Situation Number 2
A loan officer stumbled upon a woman whose house was in foreclosure. He tried to find a program to bail her out, but to no avail. She panicked and asked if the loan officer would be interested in buying her house at a discount before the trustee sale, and the renting it to her. Her reasoning was that he would have a lot of equity and she could continue to live in her house.
As in many cases when dealing with customers, the loan officer had started to think of the woman as his friend. He agreed, and a last-minute condition came that required her signature. The trustee sale approached quickly, creating a tight deadline. He told her about the condition, and she told him to sign her name, which he did.
To make another long story short, he paid the mortgage after he purchased the house - but no rent payments showed up. After many conversations in which the loan officer told the woman he could not afford to pay the mortgage with no rent payments, he told her to move out, as he would have to sell the house or find a new renter.
She called the state and divulged that the loan officer forged her signature. He currently is under state investigation. The Feds might get involved, he could lose all of his investment (and then some, as his legal bills are mounting) and he could go to jail. The lender also could call the note and hold him civilly liable. It is also possible that a court order could bar the loan officer from the mortgage industry indefinitely - not to mention kill job prospects; employers don't like to encounter the word "fraud" when conducting a background check.
Just remember that if you "help" borrowers with their signature, it could create liabilities for a long time. Borrowers may be your friends until the realize that they could throw you under the bus for their benefit. It is a crazy world in which we live. Be very careful in all your dealings for the benefit of your future.
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