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I recently ran across a straw buyer mortgage scam where the builder and the buyers added $100K in false upgrades to a large sale of town homes. There were already people (legit) who closed at the site who were obviously damaged by this.
My question: Is or can the title company being held liable for closing these homes taking into account they never asked for proof of these 'fake upgrades' ? No invoices were requested and yet they still placed the $100K on top of the selling price on the hud-1, hence the value's were inflated and subsequently ALL those units have foreclosed.
I recently ran across a straw buyer mortgage scam where the builder and the buyers added $100K in false upgrades to a large sale of town homes. There were already people (legit) who closed at the site who were obviously damaged by this.
My question: Is or can the title company being held liable for closing these homes taking into account they never asked for proof of these 'fake upgrades' ? No invoices were requested and yet they still placed the $100K on top of the selling price on the hud-1, hence the value's were inflated and subsequently ALL those units have foreclosed.
Upgrades that never took place. The builder and the buyers placed 100K in phony upgrades in the HUD. the title company suspected the fraud but let the closings go on...
In my opinion, the title company should be held liable.. your thoughts?
You state that they should be liable ...but for what reasons?
A title company's job isnt to find out if the borrower received the best rates, received a fair appraisal, to verify if the borrower overstated his income, etc.
You state that they should be liable ...but for what reasons?
A title company's job isnt to find out if the borrower received the best rates, received a fair appraisal, to verify if the borrower overstated his income, etc.
Doesn't the title company have to confirm that the "upgrades" are legit via invoices, etc? Shouldn't the title company before signing off on the HUD check and see that there aren't any misrepresentations or falsehoods?
My point is, the straw buyers were eventually told to go to hell by the title company after the suspicion of fraud occurred. They went to another title company who DID request invoices for the upgrades before signing off on the HUD. SO - the first title company let about 40 closings go without asking a question... while the new title company right away acted responsible by checking on the increase in value.
The first title company per my estimate was in on the scam and turned a blind eye.... wouldn't you agree that they are somewhat liable to the homeowners who were damaged as a result of the increased sales prices?
That's the appraiser's job and lender.
Title company conducts the closing, and makes sure that the title has no liens against it. It's main job is to make sure that the seller has a marketable title.
Title company doesnt 'sign off' on the HUD.
They prepare the HUD....and the buyer/sellers sign off on it.
Some title companies can only see fraud if they see the house being 'flipped' too early. They're only required to place the invoices on the HUD...and 'upgrades' arent placed on the HUD.
Upgrades are placed on home inspections or appraisals.
The lender relies on the appraiser for upgrades, comparables, etc.
Quote:
Originally Posted by doctorjeep
Doesn't the title company have to confirm that the "upgrades" are legit via invoices, etc? Shouldn't the title company before signing off on the HUD check and see that there aren't any misrepresentations or falsehoods?
My point is, the straw buyers were eventually told to go to hell by the title company after the suspicion of fraud occurred. They went to another title company who DID request invoices for the upgrades before signing off on the HUD. SO - the first title company let about 40 closings go without asking a question... while the new title company right away acted responsible by checking on the increase in value.
The first title company per my estimate was in on the scam and turned a blind eye.... wouldn't you agree that they are somewhat liable to the homeowners who were damaged as a result of the increased sales prices?
What if we can prove that the title company officer was in on the scam? Then the title company could be held liable, correct?
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