It seems like lately I get more and more phone calls from frustrated prospective buyers that wish to capitalize on the low prices of houses in our area combined with some pretty amazing low interest rates.
The problem is, these would-be investors don’t qualify for an owner-occupant loan, but at the same time, do not wish to pay either the additional down-payment or the higher interest rates for loans on investment property.
So they ask me to come up with a workaround to help them beat the system. And I have an answer for them.
NO!
Do they honestly think that I will risk fines, imprisonment, or the loss of my livelihood for a mere commission?
Do the truly believe that I would sacrifice my integrity and professional image for a few measly dollars?
Do they actually realize that what they are asking me to do is criminal? As a matter of fact, when they start talking about dragging an appraiser or a loan officer in it is actually a criminal conspiracy to defraud.
As a former once president stated so ineloquently, I am not a crook. I will not participate in schemes or conspiracies. I’m not in this business to make a fast buck.
I’m in it for the long haul!
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Richard I have had someone very close to me ask the same thing.....luckily they understood why I could not help them....I will not pay the price for someone else trying to be sneaky....
Richard.....there will always be a group of people who try to beat the system.....some are successful....some fall hard and bring down all of those who were involved.
Somehow people (still) think real estate folks will do anything...still that used ar salesperson attitude about us!
Richard, I agree. I have taken the stance that the buck stops here and with me...
Richard, no doubt about it. Working the system or going around the rules makes one a short timer!
Amen, why would anyone do such a thing?
Dennis...
They really do not understand how serious this is ...thanks!
Barbara...
I don't think that I would like jail very much. Plus, it just isn't right. Thanks my friend.
Gary...
There was a time when it seemed like there were no rules for many, but as we both know, times have changed a lot! THX
Michael...
It has to stop somewhere, and NOT at a lawyer's office. Thanks.
Bob...
Or a long timer in prison! lol and thanks.
I couldn't agree more. I had a situation recently with an out of state buyer. He insisted that because they would eventually live in the home that it shouldn't be an investment (never mind the fact that they were leasing it as soon as it was purchased). Once I told him that this could constitute mortgage fraud and I wasn't going to have any part of it, he bought the home with the correct down payment and investor rate.
Darrell, Newnan mortgages
Richard, I have said to people that ask me to find a temporary solution for them, Long after you stop calling yourself a "real estate investor"...I will still be calling myself a Realtor.
So many people don't realize the seriousness of trying to defraud the system. They seem to think it's just a game.
l would also say no, and I would explain it to them. If they didn't want to play by the rules, then I would say adios.
Richard my all time favorite question: Do you know a friendly appraiser?
My all time favorite answer: NO
Sounds like a short conversation in my office. People get their backs up when we mention the word "fraud," but that is exactly what it is.
Richard
I's amazing the things people will ask us to do or to ignore!
It make you wonder in what other manner they are running their companies/handling their jobs/cheating their employers/bilking the government.
A Realtor wouldn't jeopardize their career but a "common" real estate agent may. Real estate agents that are also investers. I sleep very well at night.
Some people think we are the used-house salesmen and women of the Real Estate world. No offense to any used-car salesmen and women but, some of them will do anything for a buck...
I agree with you, this is wrong on many levels- not to mention illegal. Unfortunately their are agents out there that willingly participate in these schemes and make the rest of us look bad and ruin our reputations. It is a shame that a few can harm us all!
unfortunately....this investor was doing what works. i find that we are so bound by our egos that if we have an idea that we know is taboo, we will censor ourselves. dont take it personal. that person inquired because he's gotten away with it before.....not all agents are honest
Fraud, criminal charges, fines, jail time...the list goes on. People just need to look at the news and see that these activities have consequences and anyone would be foolish to get involved. Good post!
I have to agree with your stance on this Richard. Thre is no commission check large enough for me to risk everything I've worked so hard to achieve in the industry.
Richard,
It seems that since our prices have fallen so much this has become a more common occurrence. I find it happens a lot with HUD homes.
The short answer....NO!
Richard,
No truer words for our profession were ever spoken. I'm not risking my license for a short term gain.
Rich
Hi Richard. If you could get all agents on the same page, this would be a VERY different business.
On the other hand, look at attorneys practicing law! How many ethics problems are there with attorneys after they've been schooled for 7 years!
Scott Miller, Realty Associates, Boca Raton, FL
no matter what the system might be, there will always be those who try to beat it.
You gave them the right answer and the one I always give: NO!!!!
I have had one past customer calling about lower down for investors and there just aren't many options now and totally not worth doing some illegal though.
if that doesn't give you a clear choice....
lose my license and help you commit fraud... or....
people ask...
Richard, we were talking in our office yesterday about the code of ethics. We all agreed that the code of ethics is way less than our own personal codes.
I own my own company and I've had agents here who expected me to help them "beat the system" more than once. They don't work here anymore.
Richard,
People like this are who brought down our economy. I too will not play their game. Congrats on the feature!
There is always someone that wants to try to "beat" the system. And those are the people that would never compromise their livelihoods but will ask others to do the same.
I could not agree with you more. This is loan fraud. Not only can you lose your profession, but the investor could end up in jail.
I bought an investment property in 2004 with nothing more than my drivers license and my SSN. The loan officer filled out the application and stated that the home was to be my personal residence. I tried to correct him and he said - no, I would get a better interest rate this way. This was a DIRECT lender. Times have sure changed!
Used to be if you could breath or had a pulse, bam you are in, here's your loan. Thank goodness for all it isn't that way anymore.
Richard, I couldn't agree more, however, we are in the minority. I'm finding agents will do anything for a commission. That's why Texas requires Ethics MCE to renew your license. I never thought agents needed to be reminded what's right & what's wrong. To quote a friend, their momma didn't raise them right.
Honesty always works best. That way we can sleep at night very peacefully. Cudos to you for being straight with them...
In most cases (not all), it's just a matter of education... such as asking, "Would you knowingly break the law?" Quite often, that's all I have to say.
There was an agent in our area that got four months in jail for helping a buyer participate in loan fraud. I'd say you are right on here.
Hi Richard, Very well said. Don't you like the look on their face after you say " NO " ? They get that deer in the headlights look as their words crash down arounf them !
Excellent post, Richard. With prices where they are and interest rates at historic lows, why do they need to beat the system?
Good for you Richard. I get the same kind of calls and it drives me nuts.
Hi Richard~ For the life of me I can not understand why anyone would ever agree to it and lie for anyone. I won't and will have no parts of it. Too bad there are those that will do anything for money!
As long as there are Get Rich In Real Estate Infomercials we will get calls and e-mails from useless wanna be investors. It comes with the territory. Received a call last week "uh, hey, ya, I'm an investor with cash, you know, an I need you to find me a real deal, like, something I can make money on." My response "Sorry, I can't help you". Let them waste someone else's time.
I see it a lot too. I tell people their is a little thing called HARD MONEY! I will find you the home and the HARD MONEY and then it's up to you.
The rates are great for long term rentals with 25% down, BUT these investors need to pony up. The CHEAP money is here just not the EASY money!
What I find funny about investors is they think they are so sneaky, and some of them are but for the most part if they are getting a loan the bank is checking 5 different ways to make sure there are no other loans under this person. Its a long shot anymore to see one get through the scrutiny of the lending process.
Richard well put. They have a place in Atlanta down at the end of Boulevard for people who do those kinds of things ( and I do not mean Harold's BBQ). There is nothing good that can come from this type of behavior.
Good for you. We are professionals and need to act as such.
There are always people out there who want to "game" the system. In any of my careers I have taken that same road, don't ask me to violate my ethics. Way to go.
Thank you Richard. I hope these people are getting the same answer from every agent they contact. When people ask someone to do unethical and/or illegal things, I often wonder why they would want to even work with someone who is willing to comply and I'm amazed when they complain that these people cheated them or let them down in some way - what did they think would happen?
Richard:
Really - what are some people thinking? Work out a scheme to beat the system. You need to tell them you are a miracle worker but not a criminal.
Great post Richard. No is an answer.
Showing stupidity like this tells us a lot about the prospect. Among many things like character are:
Excellent post Richard! I agree with you 100%!
Richard, unfortunately they don't care and they will keep trying until they find someone who does not care either.
Did no one learn anything from the mortgage meltdown?
What's really funny is that the co-op is usually lower than a car payment!! LOL!!!
Richard, It is such a relief to work with real estate agents that have the level of integrity that you have! Pleasure knowing you!
I have had a few people ask for this service lately myself, I tell them to bite the bullet and come up with the down payment.
I can't begin to count the number of calls that I've received from would be investor buyers who didn't even know that there were different loan requirements for owner/occupants and investors.
Richard,
You are definitely doing the right thing. These fraudsters need to be stopped as soon as possible in the transaction. Their crimes affect everyone else in the value chain and ultimately cost all of us taxpayers a fortune. Good for you!
Richard, a great topic. anyone stooping to that level with a customer deserves to get caught.
Excellent stuff here Richard. I always say very politely that as a professional, my license is not worth losing over their hair-brained ideas! :)
While there are those of us , me included, who hold theirselves to "the higher standard" there are some who don't. It your own personal integrity, how we live ourlives and stay true to ourselfves. No everyone lives this way, sad to say.
Patricia/Seacoast NH
Amen Brother! I just turned down an offer from a client, that was actually family, as he was asking me to do something that would jeopardize my license. No way, Jose!
Lenders are getting wise to these shenanigans. It's amazing how many short sales I have done for folks who bought their properties as owner occupants yet never moved in. It's always the same story....."My job didn't pan out so we didn't move to Florida"
Good job just saying NO Richard.
Richard: Thank you for writing this, I have not been approached but I have been called for a market on an investment property that was supposed to be owner occupied when it was only used as a rental (I did not take the listing) There is actually a neighborhood 20 minutes north of us where this buying as an owner then using an entire group (real estate, banker, appraiser, closer etc.) to scam the loan company came crashing down. A little under 2 years ago out of 50 homes in the neighborhood 36 of them were in foreclosure. There is a lot more to the story, last I heard it was headed in the direction of lawsuits and jail time. People who ask for short cuts end up doing a lot of damage and usually cost the people who have to clean up the mess more than they took, it is never worth it.
Yeah...I don't look good in orange and really like my license and my freedom. ugh! Sad thing is...they might find someone who will help them. But it won't be me.
Stick to your guns Richard! I have a piece of paper I make buyers sign stating they will occupy the home and understand they risk fines and penalties if they do not.
Hi Richard. Fortunately I have yet to be asked to break rules. People know better than to pull that with me here in Florida where the rules are very strict. I am not losing my license for anyone....
Usually when I am asked this question, it is by someone that thinks the rules are getting bent... not broken. But, every once in a while...
When people hint at (or flat out ask me) to find a loop hole or break the rules, I usually respond, "Have I told you about my ongoing relationship with law enforcement as a whistleblower...?" That usually puts an end to those request fast.
So many people are looking for easy ways to get rich quick. Good for you to say no Richard. It's never worth the potential trouble things like this may lead to. Best of luck to you.
My standard line: "I love you...but not enough to lose my career". Bye bye.
I recently had a situation with an "investor" promising that if I could get this done, it would be the first of many deals we'd do together. But if I didn't, he'd just find some agent hungry enough to bend the rules. I didn't doubt he could find one, but it wasn't going to be me.
Yes, they do... they think you'll do anything for a commission. They can't imagine an ethical real estate professional.
I think you did the right thing by turning them away, Richard… and, for me, the best reason you gave was to maintain your integrity and professional image.
I just say, No. A true investor knows what they are doing...newbies...not so much. When you have been in the business a long time you can smell them, from the first breath onward.
Richard, apparently these people don't listen to the news, do they? Of course, if someone gets caught, it won't be them (that's what they think). But it won't be you either! Because you have integrity and are honest!
Those that don't, won't or can't play by the rules are announcing to the world that they are incompetent and should be avoided.