PALM BEACH COUNTY, Fla. - Palm Beach County is ranking high for something no one is very proud to claim. According to the Financial Crimes Enforcement Network, Palm Beach County ranks sixth in the country for mortgage fraud. Predatory lenders aren’t the only problem. Homeowners may unknowingly be committing the crime.
It's a black mark for Palm Beach County: climbing from 31st place to sixth for mortgage fraud. While some unscrupulous mortgage companies can be blamed, they are not the only ones responsible.
"The federal government has cracked down on predatory lending,” explained Real Estate Attorney Blaine Dickenson. “A lot of the non-brick and mortar lenders have gone out of business."
Dickenson of Dickenson, Murphy, Rex and Sloan in Boca Raton says many sellers are the guilty parties, doing things like falsifying information on loan applications.
That’s not the only activity that can get a homeowner in trouble, especially for those trying to sell a house by short-sale. Dickenson said the person who buys that home is also very important."
"You can't sell it to a relative," he explained.
Dickenson said he receives three to five calls a week about short sales.
"Borrowers asking me if they can sell their underwater property to their mother or brother, sister, father or if they can get money outside the closing or have an agreement to stay in the property after closing with the purchaser," he added.
Dickenson said because the bank is accepting less money than is owed on the home, the bank is looking for the best sale possible.
"The bank is going to assume that they're not getting fair market value for the property and that there are some kind of shenanigans going on," he said.
Sellers have to sign an affidavit stating they're not related to the buyer and won't be staying in the home. Unfortunately, Dickenson explained, some sellers don't realize that until the closing and by then the temptation to sign anyway can be great.
“They may be more willing to bend the rules than when they were making twice as much money or had a job," Dickenson said.
The penalties can be steep. Mortgage fraud is a federal crime that could land you in a new home: prison for at least a year.
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