Was this mortgage fraud?

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Was this mortgage fraud?

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

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?

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Russell BrazilBusiness Member

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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

Why do you care what someone else did?

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Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
8y
Somebody give me the borrower's name and the property address so I can just pull the damn instrument.
If the DoT doesn't even say principal residence we can all turn to @John Jackson and thank him for wasting our time.
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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
@John Jackson Are you saying there was only one deal? There's always another deal. This should in fact have been "arbitrary" in the sense that it is indeed replaceable because they're all just numbers. These deals aren't emotions. If you truly can't find another deal, then perhaps you need to expand to another location.
Just about everyone here has told you that your quest is a waste of time, but you have clearly made up your mind that it is not. The only thing left that we could possibly tell you is to chat with a lawyer.
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Paul Bowers
Real Estate Investor · Macedon, NY · Member since 2016 · 251 posts · 290 votes
8y
@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.
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Roger S.
Investor · TX · Member since 2015 · 393 posts · 290 votes
8y
You're tilting at windmills here. Lighten up, Francis.
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John Jackson
OP
Amherst, MA · Member since 2017 · 46 posts · 11 votes
8y
@Paul Bowers I'd be only too happy to even reach that point. They certainly could take their chances with just waiting around again for more years for another buyer other than me to come along. There's only one way I'd ever find out though.
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Cara Lonsdale
Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes
8y
Alot of people have already commented....but I just wanted to throw this out there...
When determining what si fraud or not in these types of circumstances, it really comes down to intent.
The second purchase sounds legit because they bought the house and got an owner occ loan on it with the intent to live in, and now they do. Nothing alarming there.
The DC purchase is tricky. If they refinanced it as an owner occ, and then a month or so later moved, they could argue that their intent was to live there, but life happened. IF it is as you described and the refi was done AFTER they moved, then the intent is clear, and this would be a red flag.
NOW, with that being said, I have heard of lenders holding the lien to allow a refi of a long standing customer with no cash out (just rate terms) because the initial 12 month occupancy requirement was previously met.
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Joe SplitrockPro Member
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Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
8y
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.
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Megan Phillips
Rental Property Investor · VT · Member since 2017 · 233 posts · 147 votes
8y
@Joe Splitrock This message will self destruct in 5... 4... 3...
@John Jackson In 6 months I want to know what happened.
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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
8y
Originally posted by @Megan Phillips:

@Joe Splitrock This message will self destruct in 5... 4... 3...
@John Jackson In 6 months I want to know what happened.
LoL. I would be willing to bet that in 6 months we will all be saying "Who's John Jackson?"
I closed on a house that the seller decided to abscond with the refrigerator and stove, claiming that they weren't working properly so he "did me a favor" by having them hauled out of the house before closing. My sales contract plainly stated "Refrigerator and stove to remain with the property". Could I have walked at the closing? Of course. Did I? Of course not. If the house was a deal at $X price, it was still a deal at $X+the value of a used refrigerator & stove. Was it dishonest, unethical, hell just plain theft? Of course it was. You move on. I closed on a house where an unethical realtor got me to bid an extra couple of thousand against myself with a phantom "additional offer". Was it dishonest? Of course, but it was still a deal even considering those funds. In the end, I made a lot of money and I write off the foolishness as the cost of doing business. The OP acts like this is the only time a seller backed out of a legitimate deal.
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Brian Pulaski
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
8y
@JD Martin I had s deal where I was using the selling agent, and was 100% the highest offer. I was also no contingency and cash. I lost the deal. I had and to this day have no idea why I didn't get the house. That day when I found out I lost it, I was angry. I posted on Facebook asking what I could do to seek revenge/justice.
It was probably a day later I huffed and puffed and did... nothing. Moved on to the next deal.
The funny thing through this thread is the comments about this deal/property being so unique, it is one of a kind. Fun fact, ALL property is unique by definition. To assume no other property is equal, is correct, but applies to every single property on planet earth! We all know this, but now the OP (my @ isn't working) knows!
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Vera Kirrane
Real Estate Agent · Auburn, MA · Member since 2016 · 11 posts · 8 votes
8y
@John Jackson
I feel for you. I really do. Western MA has some fantastically quirky properties that can be very unique given age, design and location. I recently went through something similar. But here's the thing: if you can undo the sale, you will only ensure the seller will not sell to you out of spite. So you will be out time, probably money, and the house as well. The opposite of your goal. You need a different plan.
Maybe these people are investors that will renovate and sell. In that case your best bet is to step back and watch what happens. Save the money you had for the house, or better yet look around as see if you can increase what you have via REI.
In the meantime try to shake it off and see what other quirky and unique properties are out there. You have your eyes so focused on this one, maybe you are missing a few other unique gems. They are out there. They won't be the same but they could be better. If I read correctly you have had your eye on this house for a long time, so its awful how this happened. But bottom line is, the buyer that got it offered something that appealed to the seller more than what you were offering. It sucks but it happens. And your current game plan will get you further from the goal not closer. I wish you luck.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
8y
Mike brings up a good point - it would probably only be fraud in DC home not mass home which again to prove they were Fraudulent would be impossible since you would need to have proof to even get a case investigated not a hunch. Also if someone can afford a house in Washington DC and Massachusetts then I would have to guess they have some $ behind them. Last thing you want to do is take on someone with $ Who took a property from underneath you. There will be nothing in any public record that will provide any proof to justify a mortgage fraud claim.
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Ryan C.
Buffalo, NY · Member since 2017 · 88 posts · 26 votes
8y
Ok I’ll bite... I just spent too much of my life reading this but what is done is done. This brings me to this song my kids listen to from Disney’s Frozen movie.... “Let it go, let it go Can't hold it back anymore. Let it go, let it go Turn away and slam the door I don't care what they're going to say Let the storm rage on. The cold never bothered me anyway.”
4 Reply
Robert S.
Contractor · Milltown, NJ · Member since 2016 · 297 posts · 213 votes
8y
Are all 32 of this members' posts from this thread?
2 Reply
John Jackson
OP
Amherst, MA · Member since 2017 · 46 posts · 11 votes
8y
@Vera Kirrane Thank you for the considerate advice. The buyer that got it got it because the realtor selling it wasn't concerned about legalities. He literally said as much to me when I went to speak to him, after he'd sabotaged my purchase of the note but before he sold the house. As far as the current owners renovating, that's the worst thing they could do, and that's what they're doing. This house hadn't been 'updated' by anyone, at all, since it was built in 1754 for the back part, 1840 or so for the brick main house in the front. The current owers are crowing about getting rid of all that plaster and lathe, the slate roof, etc. It's literally a historic landmark being desecrated by fools. You're right. It *is* awful what's happened.
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
8y
John Jackson Another thing to consider - if you were buying the note you have no ownership rights to the property. You would still have to foreclose on it and it would go to a foreclosure sale. Also you were never dealing with the homeowner you were dealing with the mortgagee (if you were dealing with the homeowner then you are breaking laws). The homeowner has a right to transfer title and pay off its debt obligations - and if the sale does not cover it then the lender can continue to allow the sale and take less or go for a deficiency judgement. Why do you think they were all colluding with each other as this would require two lenders, real estate agents a seller and a buyer all to be in cohoots with each other. I would be curious to know what the sale price was, what the UPB was and what the payoff was.
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Brian Pulaski
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
8y
Why not post the address? You actually might get some help if you let everyone know it.
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Chase Gochnauer
Investor · Des Moines, IA · Member since 2015 · 380 posts · 201 votes
8y
1. It doesn't sound like there's anything wrong with the Massachusetts mortgage. I don't see any "arguably" about it. 2. Unless you have detailed documents you have no way to know if the loan with the local bank was "conforming"(to Fannie and Freddie standards) 3. Again unless you have detailed documents that likely aren't public, you do not know if the refinance of the Washington DC house was owner occupant or investment. As others have said, there is no winning here, short of revenge. I don't understand why you couldn't have matched the buyers price or bid higher than the new buyer, if you were in contact with the agent?
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John Jackson
OP
Amherst, MA · Member since 2017 · 46 posts · 11 votes
8y
@Brian Pulaski Honestly, I don't know who I can trust. From the tone of plenty of the responses here (but certainly not all), I don't get a warm feeling. Plus, I'm not sure what I should or shouldn't say about identifiable information, and get myself in trouble. My position that I wish to remain true to, is to do no wrongdoing myself. How could I be legitimately trying to fight what others did wrong if I'm doing the same thing? What kind of help are you picturing, if you had the address of either or both of these properties? And what kind of trouble could I be risking by connecting this discussion to them, publicly? I'm not upset at your question. I'm genuinely just trying to take good care of what I'm doing. I'm glad to keep going with the discussion.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Chris Seveney:

John Jackson
Another thing to consider - if you were buying the note you have no ownership rights to the property. You would still have to foreclose on it and it would go to a foreclosure sale.
Also you were never dealing with the homeowner you were dealing with the mortgagee (if you were dealing with the homeowner then you are breaking laws). The homeowner has a right to transfer title and pay off its debt obligations - and if the sale does not cover it then the lender can continue to allow the sale and take less or go for a deficiency judgement.
Why do you think they were all colluding with each other as this would require two lenders, real estate agents a seller and a buyer all to be in cohoots with each other.
I would be curious to know what the sale price was, what the UPB was and what the payoff was.
Chris I brought this up way early in this most entertaining thread.... as a potential note buyer there is no standing in the real estate and I know my note purchase agreement is a bare bones doc that does not even contemplate the seller default or failure to close on the note if the note does not show up you just don't close .. note sale is far different .. this guy wants to weave that into a purchase and sale agreement.. its just a note sale were the seller of note simply did not follow through I personally don't know of any punitive remidies for this scenario other than transaction did not go through as the note was never delivered.. NEXT and tough luck
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John Jackson
OP
Amherst, MA · Member since 2017 · 46 posts · 11 votes
8y
@Jay Hinrichs I haven't overlooked anything you or anyone else has said. I just can't respond to each and every point of everything by everyone. I know I don't have any direct standing in the real estate. My efforts directed at the real estate are conceived from the idea that if there was sufficient wrongdoing that went on with the real estate, maybe there's a possibility it could result in the real estate going back on the market again. With regard to my activities to purchase the note, I haven't said that I'm not considering how and when I might try and go after that civily. The note holder's attorney had my $2500 deposit in hand for two weeks, and was emailing my mortgage closing expert friend, more than once, that the deal needed to complete, and that "time is of the essence". He replied to her in writing that yes, he understood that, and yes, we wanted to close, we were just waiting for her to produce to us the actual contents of the note so that we would know for sure what exactly it was we were buying. The attorney seemed to falter at that request and didn't produce the note forthwith, even though she'd harped on 'time is of the essence'. It was within a day or so of that point of conflicting signals from her that I suddenly was giving the shove off from the owner's realtor and the note holder.
It did become clear that the note holder had been colluding with the home owner behind his own attorney's back, and in response, after she returned my $2500, she dropped the note holder as a client.

Does that sound like I had any kind of a binding transaction in progress with the note holder, and he wrongfully backed out of it?
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
John like I said at least to the extent of my note purchase agreements that we use there is no language for punitive damages or to force a seller of a note to perform..
you would need to consult and attorney over that issue.. maybe there is some case law on it..
however again once title transfer's NO matter how it did.. its time consuming and expensive to get those reversed.
good luck with it. sounds like a cool old place.. I have been building and renovating in Charleston SC the last 5 years and its cool working with all those old homes.. ours are leaners though IE the buildings are falling down.. LOL and completely different issues with title.. bad title based on sellers not taking care of business .. over the years..
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John Jackson
OP
Amherst, MA · Member since 2017 · 46 posts · 11 votes
8y
@Jay Hinrichs Thank you Jay, I appreciate the assistance and advice. Yes, it is a cool old place. There are so few of them left anywhere, let alone more than one in the same vicinity as another. Not around here, anymore. Seeing how this one made it from 1754 until now, without being desecrated, and realizing I was at a point in life where I could actually make a go of rejuvinating it, and now seeing it being trashed by a couple of people who have no regard or respect for its significance and rare status. It does hurt.
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Rick Decker
Investor · Sandpoint, ID · Member since 2017 · 8 posts · 3 votes
8y
Hi John, it sounds like this place really means something to you and this is a lot deeper than real estate investing. You’ve been asked quite a few times about your end goal and you’ve answered with, “find the wrongdoing”, but one of your first posts said it was “a property you wanted to invest your family’s future in.” I’m thinking that is really your end goal. This thread should be a wake up call for you to reassess your strategy. As many have already pointed out on here, finding the wrongdoing is not going to get your family in that house. Digging into peoples pasts is not going to get your family in that house. You made a calculated decision to go after the note instead of directly to the seller, and it didn’t work out for you. Pick yourself up and figure out a way to make the new owners want to sell you the house. “You can catch more flies with honey than with vinegar” If that doesn’t work and you don’t get your family in the house, then maybe in the “bigger picture” you weren’t supposed to be in the house. Move forward. Onwards.
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John Jackson
OP
Amherst, MA · Member since 2017 · 46 posts · 11 votes
8y
@Rick Decker I appreciate the sentiments, and don't disagree with most of them. The one I do is the idea here, and in general, of anyone telling themselves something 'wasn't supposed to be'. I don't think the universe operates like that. I don't think anything is or isn't supposed to be, etc. Life is always what we choose or choose not to make it, subject of course to external factors all the time. If I don't get my family in that house, it was just because I happened to come along with too little, too late. But I didn't know it was there before it came along. So I can't really be too mad at myself or anyone else about that. But if I was able to find that people cut corners that aren't allowed to be cut in order to get that property, that sale, their commission, etc., and I can prove it, I'll hang that on them for all it's worth. I was ready to go for this property because my wife and I have been paying our mortgage and taxes honestly for the past decade. That legitimately earned equity was going to let us make this next step happen for us. The people who have the property now? They're ripping you and me off right now. That property in DC is in a Federally subsidized, planned unit development. They got it brand new, at a steep discount. Now it's valued on paper at more than twice that. And you'd think they'd find the gratitude to at least go the whole 10-years on their covenants with the DC housing authority, to occupy it for that period, and not rent it out. Instead, they're cheating there and they participated in cheating here that had the effective result of harming me, too. If they hadn't done that, there weren't any other buyers lining up to try and rescue this property from the other people who were holding it, and their mortgagee hostage. I am taking your point though, and other people's, about carefully considering the dynamic it will setup between me and anyone who was taken down in some way for me exposing it, if that's anything I end up doing. Versus trying to make some sort of deal with them that make nice. I might seriously consider that latter strategy more if I actually had the financial muscle to flex. But I don't. My wife and I work and live within our means. We're not poor and we're definitely not wealthy. I would characterize us as fortunate.
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