A person owns a home in Washington, DC and has a mortgage on it. They relocate to Massachusetts. One month later, they refinance the DC home and get a new mortgage, claiming the DC property is still their primary residence, even though they're now residing in Massachusetts. That seems like it was fraud. But there's more.A year later, while still living in Massachusetts, they buy a home in Massachusetts. They obtain a mortgage to fund their purchase for this newly acquired home. For this new mortgage, they claim this will be their primary residence. They then proceed to truly live in this new Massachusetts home as their primary residence.The question is, has this person comitted any wrongdoing with respect to the mortgage they acquired for the Massachusetts home? Did they defraud the Massachusetts lender, or have they only defrauded the DC lender?

Why do you care what someone else did?

Take screen captures of all those social media posts. Put them up on your wall and interconnect them with strings to weave a timeline of deceit. That will help you visualize the crime. Do more detective work. I bet there is more mortgages involved. Criminals like this do a good job of covering their tracks. They will "pretend" to live in a property for one year, then actually live in a different property the next year. They time it once a year as to avoid detection by the Mortgage Investigators. Social media is your smoking gun. Some people claim tax address or bills can be used to prove residency, but Facebook is your best proof. Social media is the only reliable source of information. I wouldn't trust these people on BP. They probably have a few primary mortgages of their own, if you know what I am saying. I have said too much. I have to go now.

I'm not going to tell you how to spend your time, because if you want to waste time trying to exact revenge on a deal that fell through, that's your business, but bottom line is this: if everything is performing - meaning mortgages are being paid and no one is in default or attempting to abscond from their payment responsibilities - no one is going to care what you uncover. What are you going to tell the authorities - "Hey, guess what I found? A mortgage that was obtained under fraudulent conditions, that everyone is paying on as agreed". If you think fraud investigators are going to waste time on something like this, I think you're mistaken. PS: When everyone says "Jilted lover", they're talking about you. You're spending a ton of energy on exacting revenge, energy that could be better spent finding and closing a good deal.

@John Jackson lets assume for a minute that this deal was completely fraudulent on all sides involved. Lets assume that you prove it and they completely unwind the deal and the property is now back on the market. Do you honestly think there is any chance in hell the owner of the property is actually going to the close a deal with you???? I'm not trying to be disrespectful but you would have to be nuts to think you could drag someone through that type of legal proceeding and think they are going to the turn around and sell you their property.

@Russell Brazil sounds like a women scorned LOL.... John to help you with this quest.. who was the lender.. there are plenty of lenders that would do that deal with a 203k type loan or if its a local community bank they can lend on anything they like you should see what i buy and my local bank lends on.. extreme hoarder houses. and did you stop to think that this might have benefited the seller or owner of the note as compared to you coming in and buying the note.. maybe they did for the simplest reason of all. to minimize their loss or maximize their return. also when buying a note its not like going into contract to buy the asset. I know our note purchase agreements are simple one page affairs and there is nothing keeping the seller from changing their mind .. we just move on it happens.. but sounds like your pretty torqued on this one... mortgage fraud and appraisal fraud is handled by FBI FYI. If this is one off doubt they will do much.. to do anything with FBI you call them on the phone leave the details and they will call you if interested if they are not you simply never hear from them.. its not like TV. as a fairly large HML in my day I had a 15 million dollar forgery case that we were in teh middle of ( borrower forged docs.) that got turned over to the DA and that guy got 9 years in San Quentin ... which that probably is what your looking for LOL

@Russell Brazil @Tom Gimer I think after 3 days and a 100 post I have the answers. 1. Yes this was out and out fraud. 2. Yes call the bank/ lender/ VA and these folks will most defiantly get in trouble 3. Yes the lender will reverse the sale as it was fraud 4. yes the new owner will be forced to deed it back to the old owner 5. Yes the old owner who is now the new owner will re enter negotiations 6. the mortgage will now be able to be resold to John as its been reinstated although its still in default. 7.. and at the end of this we will have justice and world peace. !!!

Hi @John Jackson, Re: the DC lender. If this guy goes to prison or loses a major law suit, he will likely be unable to make payments. Do not expect the entity servicing the loan to cooperate, at all. If they're still getting their payments on time from a borrower that had another property with a troubled mortgage, they are primarily going to be in "cover-your-butt" mode and trying not to upset the water with this financially fragile borrower. Re: the Mass lender. Getting a new owner occupant loan every 12 months, and living there for 12 months just like you promised at the closing table, is an above board strategy that people do. I'm probably not the first person to call it the "Nomad Strategy." If they moved in and lived there like they said they would, the Mass lender has no cause for complaint on the occupancy front. You can have unlimited primary residence mortgages, not the Fannie cap of 10 that folks on BP always talk about. Re: the current owner's lender. Public records say nothing about what type of mortgage it was. Reno loans will go for beat up properties. Portfolio loans (these days) typically have nothing in public records indicating they are such -- Fannie Mae does ARMs too, so even the ARM rider wouldn't tell you anything. Most institutional portfolio lenders use Fannie/Freddie uniform paperwork / deeds of trust / etc, so the stuff you see at the county recorders office can say "Fannie Mae / Freddie Mac" all over it in spite of it being anything but a Fannie/Freddie loan. I've never personally been involved in mortgage-related litigation (knock on wood), the above are my best guesses based on zero formal training or education in law.

@JD Martin I hear ya on this one @John Jackson John you obviously are obsessed with this. but lets look at REALITY. 1. a note purchase agreement is not a real property purchase agreement. so there is no default provision or enforcement of contract provision other wise you would already be doing that and had filed a lis pendence as peeved and wronged as you perceive to be. 2. You can file complaints with HUD or other alphabet agencies but since your just an outsider your complaints will have little weight. 3. you probably not really understanding what happened here.. Mortgage brokers and Appraisers learned their lessons as you alluded to in the GFC.. one would have to be suicidal to go along with something like this.. And underwriters are too sharp.. I suspect nothing is wrong here other than you think you got snookered out of a deal. Lastly the most important part of real estate is the Phrase NEXT we have all lost deals.. it happens. Move on.. and maybe you could have moved quicker to close the deal.. there is a saying in most contract law that time of the essence.. it seems in this case it was.

Was this mortgage fraud?

John Jackson

OP

Amherst, MA · Member since 2017 · 46 posts · 11 votes

8y

@JD Martin All I'm interested in pursuing is any wrongdoing, if provable, and if correcting it would reverse the sale. If I were to find those conditions, I'd have no problem choosing to act on them. If I don't find those things, because they don't exist, that would be sensible point to go with the 'better luck next time, we've all been screwed too' balm.

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Mike D'ArrigoPro Member

Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes

8y

@John Jackson If they clearly had no intentions of continuing to live in the DC home, and it would appear that was the case, then that was mortgage fraud. There is no fraud on the Massachusetts home since it is truly their primary residence.

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JD MartinBusiness Member

Moderator

Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes

8y

Originally posted by @John Jackson:

@JD Martin All I'm interested in pursuing is any wrongdoing, if provable, and if correcting it would reverse the sale. If I were to find those conditions, I'd have no problem choosing to act on them. If I don't find those things, because they don't exist, that would be sensible point to go with the 'better luck next time, we've all been screwed too' balm.

OK. Good luck to you.

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Matt K.

Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes

8y

You do realize that even if you handed over the evidence and somehow got charges brought forth... they could just issue fines? Fines, prison are going to happen well before they undo the sale.

Unless you get someone powerful people on your side like this the sale isn't going to be undone.

https://sf.curbed.com/2017/11/29/16715078/presidio-terrace-sale-overturned-supervisors-rich-residents

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John Jackson

OP

Amherst, MA · Member since 2017 · 46 posts · 11 votes

8y

@Mike D'Arrigo Thank you. That's what I was thinking too. But I don't have any experience or training to know. I appreciate your help :)

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

8y

@JD Martin @Russell Brazil this is just someone who has no clue as to what the legal process's are and what it cost.

and to get a court ( and only a court ) can reverse a sale would cost probably as much in attornies fee's as the equity is worth if not more.. better to donate that time and money to a worthy charity..

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

8y

@Russell Brazil @JD Martin plus no attorneys fee provisions.

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Andrew Ware

Gardiner, ME · Member since 2015 · 190 posts · 177 votes

8y

I wasn’t trying to blame you. I was trying to explain the other sides point of view. And that even if you are right you still (probably) don’t win. I’m definitely trying to keep you from tilting at windmills though. Deals fall through all the time and at the last minute. Sometimes it’s shady business. If you are going to take that personally I think you need to adjust your model or avoid real estate altogether.

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John Jackson

OP

Amherst, MA · Member since 2017 · 46 posts · 11 votes

8y

@Jay Hinrichs Yes, that's the problem. Ordinary people would like to believe that the rules, regulations, laws, are simply that, and people are expected to abide by them. And if they don't, then people can expect to be held accountable for that, at the very least if someone wants to make the effort to do so. I understand that reality has become that rules and laws are only tools used by some who have enough wealth and power to wield them. Well, I can't change that on the fly. Or ever, probably. But that doesn't mean I'm going to sit around and just take it on the chin and keep my mouth shut about it. If there's anything I can do through honest, hard work to try and fight for my interests, and my interests are valuable, not just argument for the sake or argument, then I'll fight that fight.

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Matt K.

Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes

8y

Originally posted by @Jay Hinrichs:

@JD Martin @Russell Brazil this is just someone who has no clue as to what the legal process's are and what it cost.

and to get a court ( and only a court ) can reverse a sale would cost probably as much in attornies fee's as the equity is worth if not more.. better to donate that time and money to a worthy charity..

He just needs a nice senator neighbor to write little letter for him and all is well in the world.

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Matt K.

Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes

8y

Originally posted by @John Jackson:

@Jay Hinrichs Yes, that's the problem. Ordinary people would like to believe that the rules, regulations, laws, are simply that, and people are expected to abide by them. And if they don't, then people can expect to be held accountable for that, at the very least if someone wants to make the effort to do so. I understand that reality has become that rules and laws are only tools used by some who have enough wealth and power to wield them. Well, I can't change that on the fly. Or ever, probably. But that doesn't mean I'm going to sit around and just take it on the chin and keep my mouth shut about it. If there's anything I can do through honest, hard work to try and fight for my interests, and my interests are valuable, not just argument for the sake or argument, then I'll fight that fight.

Make sure your fight advances your interests.... as in finding a new deal to "replace" whatever was lost in this deal. Don't tie up your resources and time in something that won't further your interests... I guess unless your interests are making a point and exposing the (small time) wrong doing.

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Mike D'ArrigoPro Member

Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes

8y

Originally posted by @John Jackson:

@Mike D'Arrigo Thank you. That's what I was thinking too. But I don't have any experience or training to know. I appreciate your help :)

Having said that, it would be prohibitively expensive to pursue legal action with no guarantee that you would prevail. Personally, I think it would be just a drain of energy that can be put to better uses.

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John Jackson

OP

Amherst, MA · Member since 2017 · 46 posts · 11 votes

8y

@Matt K. My only interests are determining if there was any wrongdoing in this deal or by the people in it that looked like it was enough to provide an opportunity to reverse it in some way. If any other property ever comes along that would be an acceptable alternative, I'd be prepared to stop and consider whether or not I wanted to keep fighting for what I wanted, or drop it and go in the new direction. Seems simple.

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Mike H.

Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes

8y

This is a lengthy one.

But I'm not sure why you would think there would be an issue with the second loan. The first loan refi was the one that might be questionable because it sounds like they had technically moved to another state and then went and refi'd their loan and claimed it was their primary residence when it may in fact not have been.

As for the second loan, though, that scenario happens all the time. In fact, Brandon from BP is one of the biggest proponents of that exact strategy.

Its what he refers to as House Hacking.

You buy your first home as a primary residence. As a loan on your primary residence you can get loans at a much better rate and with a lot less money down.

You live in it for 6 mos or a year and then find your next deal and buy that as your primary residence and you move in there. You then rent out your first house. When you rent out that first home, you do not have to re-do your loan.

So what this person did by buying the second house and getting a loan as their primary residence is perfectly legal. They were living in the area and could justify the intent that they would be moving in when they were buying it.

So the second loan is perfectly valid.

The refi loan is the one that could be questioned. But are you sure you have all the facts? Did the owner start the refi while they were still in the first town? Did the owner have a residence in the new town yet (i.e. renting?) when they did the refi?

If they've defaulted on that first loan, I could see the bank considering pursuing something if they find out the person lied on the application by not checking the box that it was not their primary residence. Aside from that, I don't see the bank caring. Not worth going after the borrower if they're making the payments.

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

8y

John its America anyone can go on line on Social scamming media file complaints hire lawyers file lawsuits you can do it all.

I think feed back your getting is that even though all these avenues are open to you.. the end result will be nothing but a lot of your time .. and depending on your personality stress.... especially if your attorney wants a 10k retainer and starts billing you then 3 years from now your into the deal 50k and lose.

One show I think you may want to watch is American greed. you will see those that get in Major trouble have big big frauds going on for many years a lot of complaints etc etc..

so I guess to use this phrase Knock yourself out but don't be surprised if nothing happens.. but you never know.. you can try all the free avenues..

however a Recession of a real estate transaction that has title insurance most likely and lenders etc. would be EXTREMELY expensive and even at that the authorities are not going to say you need to unwind it worse they would do is make them pay off the loan...

@Russell Brazil I think we talked about this but in all my years of doing this and its a bunch 4 decades I have had ONE specific performance suit and I won it.. took almost 3 years.. I had to put the entire purchase price up in CASH into the escrow and let it sit there the whole time spent 20k in legal fees and then finally prevailed.. the seller still would not deed to me so the title company gave me title insurance based on a court order.. its the first time I had been involved with the transfer of title that did not include some sort of deed.. IE trustee Deed.. warranty deed quit claim Tax collector Sherriff Timber deed you name it.. So people can take the pot shots but they got to be ready to perform and go the long haul.

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Matt K.

Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes

8y

Originally posted by @John Jackson:

@Matt K. My only interests are determining if there was any wrongdoing in this deal or by the people in it that looked like it was enough to provide an opportunity to reverse it in some way. If any other property ever comes along that would be an acceptable alternative, I'd be prepared to stop and consider whether or not I wanted to keep fighting for what I wanted, or drop it and go in the new direction. Seems simple.

Why does the sale get reversed, why can't the "guilty" party just pay a fine and move on? And at least be real with yourself... your own words

This is about a property I came upon and concluded I wanted to invest my family's future in, for a variety of reasons.

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

8y

John Last comment.. since your not a party to the loan docs @Chris Mason the only documents you can get are ones that are public record the bank won't talk to you.. you would have to use get an order form the court to get a bank to release docs so no way your going to dig into this without money.

Other than aforementioned complaints to regulators and see where that goes.. which I suspect will be no where.

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John Jackson

OP

Amherst, MA · Member since 2017 · 46 posts · 11 votes

8y

@Mike H. Thanks Mike. Yes, I have this person's own, public words, multiple examples, telling of the move out of DC, in advance, and then of the move here to Massachusetts. The refi of the DC home was a month after the move to Massachusetts, into a rented duplex, had taken place.

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Nicole A.Pro Member

Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes

8y

It seems like a lot of time, energy, and effort is being wasted on a deal that didn't go through when you could put all of that time, energy, and effort into a deal that *does* go through. One of the first rules in REI is to not take things so personally. Sometimes you could get all the way to the day of closing and things fall through; it's life.

I am also unsure about the refi, but it clearly went through and if it's being paid, I don't see the lender bothering with it. Finally, as perfectly explained by @Mike H., one can quite easily and legally have more than one primary residence loan.

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Account Closed

Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes

8y

@John Jackson There is basically no chance of anything being prosecuted in this case. If that is what you are looking for... forget it.

Even if the person used exceptions to have two FHA loans at the same time, there is still not enough for a case.

1 Reply

Brian Pulaski

Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes

8y

@John Jackson I agree with others here, you can prove a move to MA, and therefore the MA mortgage wouldn't be the one in question. Even if you can prove the loan is conventional on a property needing rehab, who do you plan to get in trouble? Wouldn't it be the bank that made an error, not the buyer. I don't see them reversing this deal, I do see you getting a lot of people upset, and if they have the same bravado as you... they will probably want to go after you legally. Just my .02 cents.

1 Reply

Linda S.

Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes

8y

I'm in the middle of refinancing my house, and there is a question on it "Do you intend to make this your primary residence" or some variation. If it's not where you intend to live when you check off the box, that's fraud.

If the banks get their checks every month, I don't think they have any incentive to bust your friend. What benefit does the bank have, if they are getting paid and everything is good-- to go verify occupancy? They only care about $$$$. If it's your friend, leave it up to karma to take care of it, not need IMO to be the morals police.... I have a friend who just bought her first investment property, but labeled it as primary residence, obviously had no intention to move there.... she was even bragging about it, but it's whatever... let the banks solve the puzzle, not you, not your problems.

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John Jackson

OP

Amherst, MA · Member since 2017 · 46 posts · 11 votes

8y

@Nicole A. My objective as an REI in this property wasn't predicated on it being an arbitrary commodity, replaceable by some other one without regard. That's the problem for me. It's the only one there was, subjectively, and arguably objectively. So I'm running through all the 'free' avenues of redress I can find, and looking at everything by everyone to see if they did what they did legitimately. If they did, the space to investigate ends. If they could only have succeeded by breaking the law, then I will try to figure out if the law will correct it.

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JD MartinBusiness Member

Moderator

Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes

8y

Originally posted by @Jay Hinrichs:

@JD Martin @Russell Brazil this is just someone who has no clue as to what the legal process's are and what it cost.

and to get a court ( and only a court ) can reverse a sale would cost probably as much in attornies fee's as the equity is worth if not more.. better to donate that time and money to a worthy charity..

Billy Joel said it best:

I believe I've passed the age of consciousness and righteous rage
I found that just surviving was a noble fight
I once believed in causes too
I had my pointless point of view
And life went on no matter who was wrong or right.

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Brandon K.

Chicago, IL · Member since 2016 · 29 posts · 9 votes

8y

This guy's time must be worth peanuts if he is going through all of this detective work because someone else got the deal instead of him. Even if they moved to Massachusetts before refi'ing their DC loan as a primary residence, that doesn't mean the DC house can't be their primary residence. People can have more than one place to live. Life isn't fair. You can either dwell on it or get out there and find a better deal.

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Was this mortgage fraud?

Was this mortgage fraud?

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