Double Contracting

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Posted by John Behle on February 25, 2005 at 21:57:47:

In Reply to: Re: creative addendum posted by benson on February 24, 2005 at 08:02:26:

Using a separate contract to an agreeent of sale is fraud if it is hidden from the lender. It is called "Double Contracting" and it is VERY illegal.

Yes, you'll find people doing it. You may even have real estate agents and mortgage brokers that at times encourage it. The should and would lose their license if it came to light.

Any lie or deception to a lender is mortgage fraud and is punishable with up to 25 years in prison and a 1 million dollar fine per offense. It is a serious matter.

A lender can do anything they please as far as structuring loans, but keep in mind, the mortgage broker and/or loan officer is NOT the lender. They are representatives of the lender and should act in the lender's interest, but many times their only interest is in their commission. NEVER sign a document or agreement that disagrees with what they tell you. If the loan officer represents a deal one way and then hands you documents to sign that are different, don't do it. They will encourage you to inflate the price, use "phoney" gift letters, represent a transfer of funds that didn't happen (like a higher downpayment), etc.

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