Mortgage Fraud?

[pghquest]

Originally Posted by Sgoldie

I couldn't figure out why the corporation wanted to have the deed come to them by way of a trust instead of the normal way and the only thing I could think of was that it makes for a quick sale from them to someone else without triggering any notification to the bank (thus no demand for payment for the house, ie, the acceleration clause is never activated because there is no evidence of a sale as the trust still owns the house even to a subsequent buyer).

Actually the reason they want it to go from the trust to the corporation is because a home owner can make an argument that transferring the property from an individual name to a trust, is not a changing of hands, and thereby a tax exempt transfer. Once the property gets into a trust, it can change hands without any filing of court papers because you simply change the trustee. Yes, changing hands does mean that taxes are due, however because the courts never know about the change of hands, taxes are avoided. Only once the courts figure out that the transfers have taken place do they have the capability to see the transfer taxes that are due, and the only person left to go after is the seller. (everyone else is corporations, and corporations then get disolved)

[Sgoldie]

If the homeowner buys another property or realizes no gain what are the taxes? The corporation could put the deed into trust after they get it if that is the plan. Real estate transfer taxes can't be that much and the seller pays them anyway, right?

I also don't understand why two purchase offers were presented? Why didn't the corporation just submit one for the lesser amount to see if it would fly with the bank? Can't the corp go to the bank after the trust has been transferred to them and say they own the house now anyway, better give a great deal on paying off the mortgage as they don't have to pay it anyway (the seller is responsible)? Did they plan on paying the higher amount if the cheaper offer didn't go through?

[pghquest]

Originally Posted by Sgoldie

If the homeowner buys another property or realizes no gain what are the taxes? The corporation could put the deed into trust after they get it if that is the plan.

I also don't understand why two purchase offers were presented? Why didn't the corporation just submit one for the lesser amount to see if it would fly with the bank? Can't the corp go to the bank after the trust has been transferred to them and say they own the house now anyway, better give a great deal on paying off the mortgage as they don't have to pay it anyway (the seller is responsible)?

There are transfer taxes due upon the transfer of property. The reason why they didnt just submit one for the lesser amount is because they need to get an enticement to the bank to accept their offer. If they plan on letting the mortgage go into default, then the bank has a lot of incentive to negotiate a deal rather then forclose. If the bank forcloses, the investor, corporation, is off the hook because it is not in their name, it all goes back on the seller. By making several transactions, following the paper trail is difficult if not impossible, as rarely are these trust transfers recorded.

Meanwhile the buyer, investor resells this trust to someone, taking money down (like $5,000) and tells the buyer of the property that they can assume the mortgage by simply paying the mortgage obligation of the seller. End buyer/seller not understanding that the seller is still on the hook for the mortgage, and the investor, runs with the $5,000 deposit they received from the buyer.

[palmcoasting]

So it's not illegal. The buyer is taking advantage of a person's bad situation in order to make money. The buyer, if they can't work out something with the bank, has the ability to either sell the trust to someone else or just walk with no consequences. If they can work something out with the bank they stand to make even more money. If there are any consequences at all they all fall on the original homeowner. While unethical (IMO) it's not illegal. I wonder what the state of Florida would think if it was a Realtor® doing it...if they would think this was acting in the public's best interests. (it is a Realtor® doing it)
I called the state association hot line. While they said they don't understand the Realtor's role in the whole thing it should be reported. And they felt that it was mortgage fraud and suggested I report it to the attorney general's office. BUT. From the reasoning above and looking at it I tend to agree with you, it is the original homeowner that would suffer the consequences not anyone else. And why would I want to cause them more grief when they are already suffering? I'm just going to let it go.

[pghquest]

Originally Posted by palmcoasting

So it's not illegal. The buyer is taking advantage of a person's bad situation in order to make money. The buyer, if they can't work out something with the bank, has the ability to either sell the trust to someone else or just walk with no consequences. If they can work something out with the bank they stand to make even more money. If there are any consequences at all they all fall on the original homeowner. While unethical (IMO) it's not illegal. I wonder what the state of Florida would think if it was a Realtor® doing it...if they would think this was acting in the public's best interests. (it is a Realtor® doing it)
I called the state association hot line. While they said they don't understand the Realtor's role in the whole thing it should be reported. And they felt that it was mortgage fraud and suggested I report it to the attorney general's office. BUT. From the reasoning above and looking at it I tend to agree with you, it is the original homeowner that would suffer the consequences not anyone else. And why would I want to cause them more grief when they are already suffering? I'm just going to let it go.

Correct. Not sure its immoral either, other then selling the seller on the idea that they will be no longer involved once they sign the agreements. I have seen these things drag on for 10 years.

Everyone needs to remember to follow the money, whats in it for the "investor", and why is it going into corporations and not their own names.

If the corporation and/or trust agreements are not being created during a valid purchase, with a bank loan etc to go along with it, this should raise a huge red flag for people. Signing over the deed, without relinquishing the mortgage, with a signature by the mortgage bank, never releases the mortgage holder, even if a buyer says it will.