Spreading the word about mortgage fraud is not only affecting direct operations, it is changing the entire real estate industry. FNF's agency network is combating crime and saving Our Company from future claims and losses.
Harmony Title, one of our Florida title agents, uncovered fraud in two recent real estate transactions and saved his company, as well as ours, from closing bad deals. The lenders in both transactions appreciated our efforts to save them from making bad loans that would have eventually faced foreclosure.
A residential sales contract was submitted to Harmony Title by the seller with a sale price of $240,000. During the processing of the transaction, the mortgage broker informed Harmony Title of a "marketing consultant fee" of $65,000 to be paid to D & W Home Corporation at closing. The $65,000 was to be deducted from the seller's proceeds for home improvements and upgrades to be completed post-closing by D & W Home Corporation.
The transaction seemed suspicious, and in bold fashion the mortgage broker requested two separate settlement statements at closing – one for the principals reflecting the marketing consultant fee, and another for the funding lender omitting the marketing consultant fee. The mortgage broker went even further in his bold request by providing samples of what the settlement statements should look like at closing.
In a professional manner, Harmony Title suggested the buyer secure a rehab loan for the improvements and generate one settlement statement for all parties. The mortgage broker was adamantly opposed to the suggestion. Harmony Title then contacted their underwriting counsel at Chicago Title Company. In another bold move, the underwriter contacted the seller directly and provided the details as to how a fraud was about to occur. The transaction subsequently cancelled at the insistence of the seller. In addition to the seller, the new lender was thankful that
Harmony Title employees recognized the red flag warnings and refused to close.
Harmony Protects NovaStar from a Bad Loan
A residential sales contract was submitted with a buyer's deposit of $2,000, which was eventually returned by the bank for insufficient funds. When contacted by Harmony Title employees, the buyer began a pattern of misrepresentation that continued until Harmony Title reported its findings to the funding lender, NovaStar, which was being defrauded by not only the buyer, but the mortgage broker as well.
The mortgage broker was extremely anxious to close this transaction, but was not forthcoming with the details Harmony Title needed to successfully close. Harmony Title contacted the buyer directly, who submitted a New York address, New York employer and New York cell and home telephone numbers.
The mortgage broker scheduled the sign-up well in advance of the title agent's receipt of the loan closing package. He said the buyer would be flying to Florida for the closing. The deal began to unravel when Harmony Title received the loan package. The loan package contained a false Florida address for the buyer, false employment records for a Florida employer and false rent verifications. The buyer and mortgage broker were attempting to obtain financing for this buyer's primary residence. However, the buyer appeared to have no intention of moving to Florida.
Harmony Title contacted NovaStar and requested they review the package. Harmony Title employees emphasized their suspicions of falsified supporting documentation. Upon review, NovaStar discovered the buyer was using a false Florida address belonging to his former brother-in-law, false employment verification and false rent verification. NovaStar revoked its loan and expressed gratitude to Harmony Title for preventing this transaction from closing.
Harmony Title has been presented with a $2,000 reward for their actions in detecting and preventing fraud.
Moral of the Story
Harmony Title's efforts sent a message to criminals of a changing industry. Our closers, and those of our agents', are more savvy and willing to go the extra mile to protect lenders and consumers from future losses.