Loan Fraud Zero Tolerance Policy
The following changes are incorporated into your contract to be in compliance with anti-steering laws in regards to commission earned by Contractors, loan fraud policy and to define the pricing of correspondent loans with inclusion of the Broker fee for selling a correspondent note:
Loan Fraud Zero Tolerance Policy
NOTICE: ANY SUBMISSION OR REPRESENTATION OF INFORMATION TO PACIFIC HOME BROKERS INC., AS WELL AS ITS WHOLESALE LENDERS IN CONNECTION WITH A RESIDENTIAL MORTGAGE LOAN TRANSACTION, KNOWINGLY CONTAINING FALSE AND/OR MATERIALLY MISLEADING INFORMATION IS A FEDERAL CRIME.
Mortgage fraud means a material misstatement, misrepresentation, or omission relied upon by Pacific Home Brokers Inc., its wholesale lenders and its loan investors, whether individually or collectively, to fund or purchase – or not to fund or purchase -- a residential mortgage loan. Mortgage fraud is investigated by the Federal Bureau of Investigation and is punishable by up to 30 years in federal prison or $1,000,000 fine, or both. It is illegal for a person to make any false statement regarding income, assets, debt, or matters of identification, or to willfully overvalue any land or property, in a loan and credit application for the purpose of influencing in any way the action of a financial institution.
Mortgage fraud includes, but is not limited to, false information contained in identification and employment documents, as well as in a 1003 loan application; falsifying personal identities and forging or “cut and pasting” signatures; altering information presented on bank statements and government forms; fraudulent appraisals; theft of custodial funds; non-remitted payoff funds; misrepresentation of borrower funds; and property flipping where designed to falsely inflate property value. Possible mortgage fraud means that Pacific Home Brokers Inc. has a reasonable belief, based upon a review of information available, that mortgage fraud may be occurring or has occurred. It is the intent of Pacific Home Brokers Inc.’s ZERO TOLERANCE FRAUD POLICY (“Policy”) to support the industry’s and law enforcement’s efforts to eradicate residential mortgage loan fraud. Accordingly, by doing business with or accepting employment with Pacific Home Brokers Inc., you shall be directly responsible for your actions taken and not taken, services performed and not performed, and employment duties performed and not performed, in the course of your customer relationship, business dealings, and/or employment with Pacific Home Brokers Inc. The same applies to your employees, contractors, agents and representatives doing business with Pacific Home Brokers Inc. and on your behalf. You shall also be directly responsible for your compliance with this Policy.
Some of the applicable Federal criminal statutes which may be charged in connection with
Mortgage Fraud include:
18 U.S.C. § 1001 - Statements or entries generally
18 U.S.C. § 1010 - HUD and Federal Housing Administration Transactions
18 U.S.C. § 1014 - Loan and credit applications generally
18 U.S.C. § 1028 - Fraud and related activity in connection with identification documents
18 U.S.C. § 1341 - Frauds and swindles by Mail
18 U.S.C. § 1342 - Fictitious name or address
18 U.S.C. § 1343 - Fraud by wire
18 U.S.C. § 1344 - Bank Fraud
42 U.S.C. § 408(a) - False Social Security Number
The Most Common Examples of Mortgage Fraud:
1. Identity theft;
2. Submission of inaccurate or misleading information, including any false statement on the loan application(s) and falsification of documents purporting to substantiate credit, employment, deposit and asset information, or personal information including identity, ownership/non-ownership of real property.
3. The alteration or forgery of otherwise predominantly accurate information.
4. Inaccurate representations of current occupancy or intent to maintain required occupancy as agreed in the security agreement.
5. Lack of due diligence or concern by borrower, loan officer, or processor including failure to obtain or divulge all information required by the application and failure to request further information as dictated by Borrower’s response to other questions. This could include the following examples: (i) simultaneous or consecutive processing of multiple owner-occupied loans from a single applicant where information differs on each application; (ii) permitting an applicant or interested third party to assist with the processing of the loan; and (iii) failure to disclose any relevant or pertinent information known to the Broker which could negatively impact the lending decision. Pacific Home Brokers Inc. specifically represents the integrity of its loan production to its wholesale lenders and to the end loan investors that include federal government agencies and enterprises.
Consequently, residential mortgage loan files containing fraud or material misrepresentation can not only negatively impact the company’s business reputation and severely strain its business and investor relationships, but it can also go so far as to expose the company to severe legal penalties such as is found in the laws listed above as well as in the federal False Claims Act to combat fraud perpetrated against the federal government.
POSSIBLE CONSEQUENCES OF LOAN FRAUD AND/OR MISREPRESENTATION:
1. Acceleration of debt as authorized by the security instrument (Deed of Trust/Mortgage).
2. Criminal prosecution, which may result in possible fines, imprisonment or both.
3. Civil action by Pacific Home Brokers Inc. for damages.
4. Civil action by other parties to the transaction, such as the seller or real estate agent/broker.
5. Forfeiture of any professional license.
6. Long term adverse effects on credit history.
For Loan Officers, Brokers, and Realtors:
1. Criminal prosecution which could result in fines, imprisonment or both.
2. Loss of professional license.
3. Loss of access privileges due to exchange of legally permissible information between lenders and mortgage insurance companies; loan investors (ie, Fannie Mae and Freddie Mac); policy agencies; and state and federal regulatory agencies including the Department of Justice and the FBI.
4. Civil action by applicant/borrower, Pacific Home Brokers Inc. and/or other parties involved in the transaction.
5. Loss of approval status with wholesale lenders
6. Employment termination.
If Broker finds that Contractor committed fraud, Contractor will forfeit any commission received by Broker.
The undersigned represents no alterations have been made to this Agreement and all documents, policies, and agreements referenced in and associated with this Agreement have been read and understood.
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Document Name: Loan Fraud Zero Tolerance Policy
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