A Canadian real estate agent lost her license after referring clients to someone "she knew or ought to have known" was not a registered mortgage broker, according to a recent decision from the British Columbia B.C. Financial Services Authority.
Between 2016 and 2018, the real estate agent referred six homebuyers to the broker in connection with various transactions. She made those referrals "in anticipation" of being paid by the broker, something she failed to tell her clients.
She submitted mortgage applications prepared by the would-be mortgage broker for three properties. In each case, the mortgage application contained falsified income and savings information, according to the judgment. She also used the services of the unidentified broker "to obtain mortgage financing for two properties."
In 2017, complaints were made to the Financial Institution Commission of B.C. regarding possible fraud being committed.
In February 2019, financial investigators took part in a search of the broker's property, seizing cellphones, portable drivers, and mortgage files. Among the seized items, investigators found a color-coded Excel spreadsheet that featured clients, the names of people who referred those clients, closing dates, fees, and property addresses.
The realtor was listed both as a borrower in the client spreadsheet and as a realtor who had received a finder's fee for client referrals.
The realtor acknowledged her misconduct was serious, but contended that any consequences were "minimal". She argued the homebuyers still have their properties, and no one has defaulted on any of the mortgages. Moreover, she argued she did not know the person she was dealing with was not a registered mortgage broker.
In addition to having her license cancelled, the agent was fined $40,000 and ordered to pay an additional $90,000 in enforcement expenses. Jeremy Shepherd, "Real estate agent loses license over mortgage deals with falsified data" www.tricitiesdispatch.com (Jul. 18, 2024).
Commentary
Falsifying income and savings information is a common type of mortgage fraud in the United States. The schemes are perpetrated by individuals acting alone or in collusion with borrowers, loan originators, or real estate professionals.
For example, a recent news report indicates that on February 06, 2024, Marilyn Mosby, age 44, was convicted on the federal charge of making a false mortgage application relating to the purchase of a condo on Long Boat Key, Florida, while she was Baltimore City State's Attorney.
All mortgage fraud schemes contain a material misstatement, misrepresentation or omission relied upon by an underwriter or lender to fund, purchase, or insure a loan.
Realtors should not commit fraud, of course, but they should also make every effort to protect their clients from fraud.
One common fraud technique is to divert closing money to a fraudulent bank account during the final stages of the closing process. As a real estate professional, your best line of defense against this type of crime can be summed up in four words: "Inquire Before You Wire."
