Mike Sikorski,MBA,GRI

Question: What do you get when you combine a dishonest mortgage broker, dishonest title agent, and a dishonest real estate appraiser? Answer: heavy fines as well as a lengthy prison sentence!

Law enforcement officials and government regulators are cracking down hard on people involved in all aspects of the real estate business who commit or conspire to create fraudulent mortgage loans as well as illegally obtain mortgage loans, which ultimately costs tens of billions of dollars to both mortgage lenders and consumers each and every year.

Recently, Federal agents in both Miami and Anchorage, Alaska have charged numerous people with scheming to defraud banks and mortgage lenders out of millions of dollars in illegally obtained mortgage loans. These individuals include home sellers, so-called ‘straw' buyers, real estate agents, title agents, real estate appraisers, bank employees and mortgage brokers, all d in the purchase & sale of properties using inflated real estate appraisals, fraudulent loan documents, as well as inflated mortgage loans, allowing these people to pocket millions of dollars. Kickbacks and bribes were paid to cooperating home sellers with the remaining individuals earning illegally obtained commissions in their respective professions.

These various individuals are now facing charges of mail fraud, bank fraud, wire fraud, money laundering, as well as giving false statements (e.g. signing loan documents you know to be false!), with penalties involving lengthy prison terms as well as millions of dollars in fines. The home sellers themselves are also faced with these same charges.

In these particular cases, the persons involved seem so far away, especially with Anchorage Alaska thousands of miles away from Florida. Yet you may not know it, but mortgage fraud has occurred right here, in our own back yard!

Numerous homeowners in and around our community as well as nationwide have obtained fraudulent mortgage loans to either purchase a home or refinance the mortgage on their current home, who under normal circumstances would have never received a mortgage loan of the amount they did. As a result, many of these same homeowners are now facing the very real prospect of losing their home to foreclosure.

Recently, I have personally spoken with well over 100 homeowners in and around our community who have disclosed some rather unorthodox methods of purchasing and financing real estate, all of which was accomplished with the aid of some very unscrupulous mortgage brokers, mortgage bankers, title agents, real estate appraisers, and yes, even real estate agents. In almost every case, each of these homeowners has obtained a mortgage that would never be approved by an honest mortgage loan underwriter. Each homeowner had debt to income ratios that almost doubled what a conventional mortgage loan underwriter would find acceptable. Each of these homeowners had fully documented income sources, with no job or income changes since their loan was first obtained. You may be asking yourself, how could this happen? How can someone get a mortgage loan they know they cannot afford, and yet somehow still qualify for what amounts to be a very unaffordable mortgage loan? Mortgage fraud, pure and simple.

These days it seems mortgage fraud is involving more than the usual suspects. Now the actual home owners and home sellers are getting involved, perhaps not realizing that their involvement alone subjects them to the same scrutiny of that of anyone else involved in a fraudulent transaction. Falsifying income tax returns, creating pay stubs, and conspiring with others to re-create an income or credit history is being accomplished by real estate professionals, mortgage professionals and consumers alike, all in the effort get something that you would normally not qualify for.

The current mortgage and real estate crisis we are now faced with is definitely giving pause to many, especially those faced with losing their homes to foreclosure. However, those people involved in many of these mortgage loans that were obtained fraudulently should be more concerned about how they may be judged in the near future, should they get caught being a party to mortgage fraud.

There is no home or mortgage loan you must have that means having to commit mortgage fraud to get it. One can only hope that seeing this mortgage and real estate crisis first hand will cause them to think twice about being a party to mortgage fraud.

Reading articles like this one about mortgage fraud is one thing; actually reading the headlines of the arrests & indictments of people within their own community and seeing the names of the actual individuals facing serious prison time has to be a real wake up call. Let's hope everyone wakes up today, and realize that the mortgage fraud you commit today may end up costing you your freedom tomorrow.

Mike Sikorski, GRI

Licensed Real Estate Broker

Licensed Mortgage Broker

Loss Mitigation Specialist

Florida Realty Network LLC

22079 Kimble Avenue

Port Charlotte, Florida 33952

Phone 941-206-6000

Mike@FloridaRealty.net

If you purchased your home in a sellers market and are trying to sell your home in today's buyer's market, it is highly likely that you will be faced with asking your mortgage lender for some debt for some debt forgiveness in selling your home, otherwise known as a short sale. Putting your home for sale as a short sale is one thing; getting your mortgage lender's approval to sell your home as a short sale is altogether something different.

In most instances, your mortgage lender will require you to provide them with personal & financial documentation before they will even consider accepting a short sale of your home. The documentation typically asked for by most lenders will consist of the following:

*Recent pay stubs to document employment and income

*Your two most recent Federal income tax returns

*A list of assets and liabilities

*Two recent bank statements to review monthly cash flow

*A Comparative Market Analysis of your home

Why does the lender need this documentation? Your mortgage lender is looking at all of their options, some of which may not be in your best interests. The Comparative Market Analysis gives your mortgage lender a glimpse of what your home may sell for today, based on recent home sales in your area that compare closest to your home. An analysis of your income, assets, and liabilities by your mortgage lender may be done to determine whether or not you can afford to make monthly payments towards the difference of what is currently owed on your mortgage, and what the home will likely sales price of the home! For example, if you owe $300,000 on your note and mortgage, and your home sells for $200,000, the difference of $100,000 can be made into a promissory note from you to the mortgage lender. A $100,000 loan at 8% interest over 30 years is $733.80 per month! Several recent real estate sales failed to close due to this requirement by the mortgage lender.

Given the fact that mortgage lenders nationwide are faced with losing billons of dollars due to the current mortgage and real estate crisis, they will do everything possible to minimize their losses. The promissory note for the deficiency balance is just one example of what lenders will attempt to do to keep their losses to a minimum.

What if your mortgage lender doesn't approve the short sale? Not all short sale requests are approved by most mortgage lenders. In fact, it has been said less than 50% of all requests for short sales are actually approved, leaving the homeowner with even fewer options. Regardless of which option you choose, your mortgage lender already has updated information and documentation on you and your home, which may put you at a real disadvantage, especially if your home ends up in foreclosure.

The best advice I can offer to someone in this situation is to speak to an attorney immediately, especially someone who specializes in real property foreclosure. I have spoken to several attorneys whose recommendation has been to simply allow the home to go through the foreclosure process. Once the home is sold, there still remains the very likely possibility that there may be a deficiency balance owed by the homeowner to the mortgage lender. A bankruptcy attorney can provide you with very helpful advice in dealing with any deficiency balances that may be owed to the mortgage lender.

Losing your home in a foreclosure does not mean you can never own a home again. In fact, you may be able to get another mortgage in as little as two years, provided that you take several steps towards re-establishing your credit shortly after the foreclosure occurs. A competent financial professional can tell you how.

It is inevitable that hundreds of thousands of homeowners nationwide will lose their homes through foreclosure over the next 2 years, especially those homeowners whose mortgages had interest rate adjustments and simply could not refinance their mortgage due to declining property values. Asking your mortgage lender to approve a short sale of your home may end up creating more headaches for you than necessary.

Make sure you seek competent financial and legal consultation before you consider selling your home by short sale.

Mike Sikorski, MBA, GRI

Licensed Real Estate Broker

Licensed Mortgage Broker

Loss Mitigation Specialist

FLORIDA REALTY NETWORK LLC

22079 Kimble Avenue

Port Charlotte, Florida 33952

Phone (941) 206-6000

Email: Mike@FloridaRealty.net

Most of the properties for sale as Short Sales as well as properties currently in foreclosure are unnecessary, so property owners should strongly consider all of their options before taking the steps towards certain financial ruin and seriously derogatory credit.

The use of Federal and State lending laws could dramatically alter the ever-increasing number of homes for sale as a short sale, as well decreasing the large number of foreclosures and bank-owned properties. More importantly, homeowners can keep their homes and improve their credit rating.

A thorough review of all mortgage loan documents, including the initial loan application and disclosures up to the final closing documents should be carefully reviewed for lending law violations that have been found in over 80% of mortgage loans originated in the last five years. This in turn could give their current mortgage lender the encouragement necessary to modify the mortgage loan to more favorable terms, such as a principal loan reduction and/or a low fixed interest rate, regardless of the homes current value!

Long before the recent call for sweeping changes to mortgage loan underwriting guidelines, Federal lending laws such as RESPA, TILA, HOEPA and other acronym-shortened lending laws were enacted to prevent much of the abuses that have recently been found in thousands of subprime credit and conventional mortgage loans, especially those mortgage loans originated in the last three to five years.

The combination of toxic mortgage loans coupled with unscrupulous mortgage brokers and out of state mortgage lenders who originated high cost, high interest loans at the expense of consumers often represent the largest portion of error-filled mortgage loans. Tens of thousands of these problematic mortgage loans have been found to violate at least one Federal and/or State Lending laws that could present trouble for mortgage lenders, and opportunities for consumers to make their mortgage loan affordable and less risky.

Homeowners considering a short sale of their home or are facing the certainty of a foreclosure on their home are strongly urged to contact a qualified and experienced Mortgage Loan Auditor right away to have an extensive Forensics Audit of their mortgage loan documents. Many audits can be completed in as little as five days, and could be very useful in modifying their mortgage loan and/or stopping a foreclosure.

If your home is currently listed for sale as a Short Sale, a Forensic Mortgage Loan Audit can still be completed, since most mortgage lenders desire to have the home listed for sale as a Short Sale even when the customer requests a mortgage loan modification.

Whether it is your goal to seek a mortgage loan modification, loan reinstatement, or rescission of your mortgage loan all together, proper use of these lending laws as a means of dealing directly with your mortgage lender does give you advantages in helping you keep your home while at the same time leveling off ever decreasing property values due to unnecessary short sales and foreclosures.

Mike Sikorski, MBA, GRI

Licensed Real Estate Broker

Licensed Mortgage Broker

Loss Mitigation Specialist

Florida Realty Network LLC

22079 Kimble Avenue

Port Charlotte, Florida 33952

941-206-6000

Mike@FloridaRealty.net

The interest rates and closing costs that you shop for today for a mortgage loan could be dramatically different when you get to the closing table.

Unscrupulous mortgage broker and bank loan officers are intentionally quoting low interest rates and even lower closing costs as a way to get consumers to stop further shopping for a mortgage loan, and sign on with them. By the time the loan closing occurs, the interest rate jumps up as well as the closing costs, putting the consumer at a disadvantage that is both highly illegal and unethical.

In most cases, the unscrupulous loan officer or mortgage broker will quote the interest rates and closing costs over the telephone, even before a loan application is taken or a credit report is ordered. This is in itself is highly illegal, and is one of the most abusive tactics within the mortgage industry. Unless a bank or mortgage lender is offering a truly non-qualifying mortgage loan program with regard to credit or income, they cannot tell you what interest rate you will be charged or what the amount of the closing costs will be for your particular loan request, without first getting ALL of the information needed to make a determination of interest rates and/or closing costs. Yet, this abusive lending tactic goes on every day, with the loan officers and mortgage brokers benefiting at the expense of the consumer.

The Good Faith Estimate (or GFE) that a consumer receives at the time of loan application will contain a list of closing costs that a consumer can expect to pay for a given mortgage loan. The list of costs will include points, appraisal fees, as well as closing fees that are known to the lender at the time of application. Ideally the costs contained in the initial Good faith Estimate should resemble that of the closing costs appearing on the HUD-1 Settlement Statement which you would receive at the actual loan closing.

In the case of loan officers and mortgage brokers using ‘Bait & Switch' tactics, the loan costs on the initial Good Faith Estimate will most likely appear to be significantly lower than that of what the consumer will truly end up paying at the loan closing. Additionally, the interest rate could also change significantly from the time of application, and often times goes without explanation by the loan officer or mortgage broker, leaving the closing agent to sell both interest rate and the closing costs. Depending on the immediate needs of the consumer, the loan may close anyway, with the consumer never knowing why their closing costs increased or why the interest rate increased until its too late to say anything.

The practice of ‘Bait & Switch' is not only abusive; it is highly illegal. Under Federal law, loan officers and mortgage brokers are subject to very steep fines as well as possible criminal charges for committing ‘Bait & Switch', as well as other abusive practices.

The Real Estate & Settlement Procedures Act of 1974 (or RESPA) requires that consumers receive the following:

*A Good Faith Estimate, containing an estimate or a range of charges

*A copy of Buying Your Home, offering a detailed explanation of what closing costs are, as well as other helpful information.

*A HUD-1 Settlement Statement, providing a detailed list of the closing costs you will pay for your loan closing.

Loan officers and mortgage brokers are required to re-disclose any changes in closing costs or interest rates to mortgage loan applicants as often as necessary to keep the consumer informed as to any changes that may occur. If changes occur in the closing costs, a new Good Faith Estimate is required to be given to the loan applicant. If changes in the interest rate occur, a Truth in Lending (or Til as it is known) disclosure may also be required.

The only way for these abusive lending practices to stop from happening, is for you, the consumer, to stop it from happening. If you let these unscrupulous loan officers and mortgage brokers get away with committing this crime, you are allowing yourself to unnecessarily become a victim of this abuse.

The following are some tips to help you prevent becoming a victim of ‘Bait & Switch' and other abuses commonly used by these predatory lenders:

*Demand an ‘honest' Good Faith Estimate at the time of loan application. Let your loan officer or mortgage broker know you have read articles about common lending abuses such as the ‘Bait & Switch', and let them know you will not be a victim. Hopefully this upfront disclosure by you from the start will keep them honest, minimizing any chance that the Good Faith Estimate they give you is as accurate as possible.

*Keep regular contact with your mortgage lender. Ask them for updates on any changes in your loan status, or if they anticipate any changes in the closing costs or the interest rate. If there are changes, demand that they give you new disclosures immediately that reflect those changes.

*Be a smart Loan Shopper. Ask the right questions, beginning with the years of lending experience that a given loan officer or mortgage has. Then ask about the loan programs that they offer, such as FHA, VA, & Conventional mortgage loan programs. Ask about the likelihood of the closing costs and interest rates changing from the initial disclosures given to you, and the reasons for why they might change. Never give a loan officer or a mortgage broker verbal authorization order your personal credit report, without first signing all of the Federally required mortgage loan disclosures.

*Demand to see the HUD-1 Settlement Statement before the loan closing occurs. Federal law requires that HUD-1 Settlement statement be made available to you at least 24 hours prior to the actual loan closing. This gives you an opportunity to see the true closing costs ahead of the closing without the pressure of sitting at the actual loan closing. Any discrepancies in the closing costs should be addressed immediately, especially if these discrepancies were not re-disclosed to you prior to the loan closing

More importantly, don't fall for the fast talking sales pitch that tells you everything you want to hear. Often times, the answers you may want to hear are not always possible. The unscrupulous loan officer or mortgage broker will try to tell you everything you want to hear, even if it means using half truths about interest rates and closing costs. The right mortgage broker or loan officer is the one who will offer you straight forward advice, with many mortgage programs to choose from, and will likely never give you interest rate or closing costs information over the telephone without first taking a complete loan application, pulling credit, and reviewing all income documents. Anyone who does give you interest rate and closing costs information over the telephone without this information is breaking the law.

Keep in mind that Interest rates and closing costs are important, but the loan you receive will likely cost you thousands of dollars over the life of the loan, and choosing the right loan program will help minimize just how much you do pay over the term of the loan.

You can easily avoid becoming a victim of ‘Bait & Switch' tactics and other abuses by choosing your mortgage broker or loan officer wisely. Experienced loan officers and mortgage brokers can help you get the mortgage loan you are looking for, with the right interest rate and competitive loan costs. Choosing the wrong loan officer or mortgage broker can just as easily happen, with consequences far too expensive to even consider.

For free copy of "Buying Your Home" or other information regarding mortgage loan programs, please call 941-206-6000.

Mike Sikorski, GRI

Licensed Real Estate Broker

Licensed Mortgage Broker

Florida Realty Network LLC

22079 Kimble Avenue

Port Charlotte, Florida 33952

Phone 941-206-6000

Email: Mike@FloridaRealty.net

The current mortgage crisis has brought about increased awareness of mortgage loans fraught with errors that could allow homeowners to completely rescind their mortgage loan, including those homeowners facing foreclosure.

Violations of the Truth in Lending Act (Regulation Z) have proven to be very effective defenses for homeowners currently facing the prospect of a mortgage loan foreclosure, literally stopped the foreclosure action from continuing forward, once the findings of violations of either HOEPA or Truth in Lending have been found.

Improper calculations of finance charges directly related to the Truth in Lending statement of (TIL) have been found in over 80% of mortgage loans originated by banks and mortgage lenders over the last 5 years, creating huge liability for banks and mortgage lenders to refund ALL of the finance charges and other loan costs associated with the mortgage loan. In addition, the mortgage loan itself could be completely rescinded, leaving a ZERO mortgage balance owed by the homeowner!

However, it does not end there. Violations of both Regulation Z (Truth in Lending) could yield additional penalties to the bank or mortgage lender, including:

*Requiring the bank or mortgage lender to refund ALL sums paid over the life of the mortgage loan

*Reimbursement of all court costs and legal fees

*Triple damages may be awarded to the homeowner if litigated in court.

The violations of Truth in Lending are quite severe, as many of our nation's top banks and mortgage-lending companies are finding. For the tens of thousands of homeowners who fell victim to Predatory Lending by unscrupulous mortgage brokers and loan officers, this news could not have come at a better time.

For a mortgage loan to be considered rescindable under Federal law, a borrower must demonstrate:

*The mortgage loan was secured by a principal dwelling of the person for whom the credit was extended.

*The loan was not used to purchase an existing home or construct a new home.

*The mortgage loan was a refinance of a previous loan either: 1) held by a different mortgage lender than the original lender, or 2) the borrower refinanced with the original lender and took cash out of the subject property.

*The loan was closed less than three (3) years ago.

*AND on e of the following applies:

-The loan is currently in foreclosure and any mortgage broker fee was not included in the finance charge

-The loan is currently in foreclosure and the finance charge was understated by more than $35

-A material disclosure was not provided to the borrower, including the disclosure of the correct:

*APR (Annual Percentage Rate)

*Finance Charge

*Total of Payments

*Payment Schedule

*Existence of a variable rate feature, if applicable.

*Information with respect to the notice of Right to Rescind.

-The loan is not in foreclosure AND the finance charge exceeds .50% of the mortgage loan amount or $100, whichever is greater.

Homeowners interested in having their mortgage loan documents reviewed for Truth in Lending errors should contact an experienced and qualified Mortgage Loan Auditor to see if your mortgage loan has violations of the Truth in Lending law. After that, you should contact a qualified Consumer Law attorney experienced in dealing with Federal lending laws.

Mike Sikorski, MBA, GRI

Licensed Real Estate Broker

Licensed Mortgage Broker

Loss Mitigation Specialist

Florida Realty Network LLC

22079 Kimble Avenue

Port Charlotte, Florida 33952

(941) 206-6000

Mike@FloridaRealty.net