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, 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

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

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

Just when you thought the housing and mortgage crisis was limited to only homeowners, a new victim has been brought into the fray, one who doesn't own a home or have a mortgage. Who are these new, unsuspecting victims? The people who are actually renting homes!

Thousands of homeowners (namely investors and property speculators unable to sell homes purchased in the recent sellers market) have opted to rent their homes to help offset their monthly debt service. Low market rents compared with high risk, high interest mortgage payments are causing many investors to go ‘out of pocket' to pay the difference each and every month, creating a negative cash flow position costing hundreds and sometimes even thousands of dollars monthly in subsidized debt service payments.

"Robbing Peter to Pay Paul" Landlords/investors juggling several properties with negative cash flow are often seen prioritizing which mortgages should get paid first. This can prove especially difficult after doing this for several months, in most cases providing disaster results. Poor bookkeeping coupled with a consistently delinquent mortgage history are causing many landlords to default on their mortgages all together, leaving many of their tenants with no place to go.

"...But I'm paying My Rent on Time!!" A perfect rental history may still get a tenant evicted from their homes, especially those tenants renting from landlords' facing a property foreclosure. The rental lease you signed with your landlord may afford you some legal remedies, but in most cases may not help you if your landlord ends up in foreclosure. If your landlord does end up in foreclosure, they might not tell you directly, but you will find out soon enough, when a sheriff's deputy or other process server serves you, the tenant, with a summons for foreclosure. Your actual name likely will not appear on the summons, except as Tenant #1, 2, 3, & 4. The summons is merely to inform you that the leasehold interest you have in the property is at risk of foreclosure. At this point, you should strongly consider seeking the advice of a competent attorney to help you understand your rights as a tenant. The rents you pay today may only end up in your landlord's pocket, with no assurances that your landlord will honorably pay their monthly mortgage payment.

So You Want To Rent Me your Home.... Although it is customary for the landlord to interview a prospective tenant, in these times, it may be just as important for a tenant to interview the prospective landlord. Before you sign a lease for the next home that you rent, ask your prospective landlord about the number of homes they are currently renting out, as well as the number of year's experience they have as a landlord. Ask them about their take on the current mortgage and housing crisis, especially their thoughts on the high number of rentals falling into foreclosure. It may not hurt to do quick search of the Public Records with the Clerk of the Circuit Court in your county may show pending lawsuits or foreclosure actions against a prospective landlord. Access to these records is easily attainable over the Internet.

Help Your Landlord, Help Yourself. The difficulty a landlord has in making their monthly mortgage payments could present a real opportunity for you, the tenant, to actually purchase the home you're renting. Depending on the market value of the home you are renting, how much your landlord owes on their mortgage, and how much you can afford to pay each month you may present a real opportunity for you to purchase the home through a short sale, provided that your landlord's mortgage lender will approve of a short sale. If this is not an option, and you find out the home you are renting is in foreclosure, consider having a frank and open discussion with your landlord regarding the remaining term of your lease and how it may be affected by a potential foreclosure on the property you live in. Inquire about any security deposits you may have paid at the beginning of the lease. If your landlord is uncooperative, you may want to consult a competent attorney immediately.

Get All of Your Ducks In A Row A foreclosure action against your landlord could pose potential problems for you should you decide to rent somewhere else. A sudden move in the middle of a lease could raise questions from future landlords, so proper documentation by you to support your rental history is critically important. Some examples of proper documentation to consider are as follows:

*Pay all monthly rent payments and security deposits by personal check, bank check, or money orders. Paying cash proves nothing in terms of a rental history, and provides no support to you should you seek to recover any security deposits. Always pay in a format that can prove your honesty.

*Keep copies of cancelled checks to show a consistent payment history. Cancelled checks are the most effective way to show your ability to make monthly rent payments on time as well as the frequency of paying your rent at a certain time every month. A consistent payment history can provide indisputable proof that you are a good risk.

*If you are served a foreclosure summons, keep a copy for your records. If the rental you are living in does fall into foreclosure, you are likely to be served foreclosure papers as well, since you have a leasehold interest in the property. If you lose your rental as a result of a foreclosure through no fault of your own, the foreclosure papers you are served along with the documentation noted above will greatly enhance your chances of securing another rental with greater ease, and will also help you tremendously in the event you decide to purchase a home of your own in the near future.

You may not always know if your landlord is making their mortgage payments, but through careful landlord screening and proper documentation, you can protect yourself and minimize the chance of facing eviction by foreclosure.

For free copy of "Ten Tips for Tenants" or a free brochure on "Why Rent When You Can Buy?" please call 941-206-6000.

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

Mike@FloridaRealty.net

Consumers "shopping" for a mortgage have taken on a new twist, leading to the creation of an information-sharing network by competing mortgage lenders.

In a desperate attempt to secure some forms of mortgage financing, loan applicants have turned to tailoring their loan application and loan documentation to that of what a mortgage lender is known by reputation for getting certain loan programs approved and closed. Think, "Telling them what they want to hear". This includes stating different sources of income and even alternative forms of credit, all in an effort to get the loan approved the way the applicant thinks the lender would like to see.

It is for these reasons competing mortgage lenders nationwide have created an information-sharing network to crosscheck loan applicants activity, such as income documentation and asset verification.

Using a mortgage loan applicants name and social security number, mortgage lenders nationwide have begun sharing pertinent applicant information as a way to safeguard mortgage lenders and investors from mortgage fraud. The information shared is based on specific information provided by the loan applicant, such as income and stated sources of income. This information is run through a database to see if this same loan applicant may have tried to apply for a mortgage loan with another mortgage lender, using different information. Loan applicants who provide conflicting information from one mortgage lender to another are not only immediately turned down for their loan request, are also subject to criminal charges of mortgage fraud, among others.

In addition to tracking consumer information, mortgage lenders are also tracking the names of mortgage brokers and loan originators who placed the loan with the mortgage lender, to see if potential fraud is being committed on the origination side and not the consumer.

In case you are wondering why a competitive group of mortgage lenders would band together in this effort, the answer is very simple. A majority of these lenders sell their loans their loans on the secondary market, and at some point in the future, could possibly sell their loans to each other. No mortgage lender wants to get stuck with a fraudulent loan, so a consensus of these mortgage lenders realized it was better to work together to combat mortgage fraud together.

Mortgage fraud is very serious crime, and is being taken seriously by mortgage lenders as well as law enforcement. The Federal Bureau of Investigation is current investigating thousands of cases of mortgage fraud, with consumers and so-called mortgage professionals being sentenced to lengthy prison terms and paying heavy fines as the direct result of committing mortgage fraud.

Think twice about the information you provide to a mortgage lender when applying for a mortgage loan. The assets and income you claim as well as the declarations you state on a mortgage loan application will be carefully scrutinized by mortgage loan underwriters, more so now than ever before. If you got away with mortgage fraud once, it is highly unlikely you'll succeed the next time around. And if you do succeed in committing mortgage fraud, just remember that months and even years later, you could get a knock on the door from someone with a badge in one hand, and handcuffs in the other.

For more information on how you can avoid mortgage fraud and predatory lending, please call 941-206-6000.

Mike Sikorski, MBA, GRI

Licensed Real Estate Broker

Licensed Mortgage Broker

Loss Mitigation Specialist

Florida Realty Network LLC

22079 Kimble Avenue

Port Charlotte, Fl. 33952

(941)206-6000

Mike@FloridaRealty.net