From time to time, I'll have to deny a purchase money loan application where the borrower's documentable income is insufficient for a loan approval. Self-employed borrowers often find themselves in this situation, especially in the last two years as underwriting guidelines have tightened up.
It's understandable that taxpayers want to minimize their taxable income. The rub comes when the borrower asks "if there's any way" to bump up the income. My standard reply is to ask if they want to show more income on the current year's Tax Return and put off the purchase until such time as that can be done.
It's never fun to deny a loan, and since everyone in the transaction has an iron in the fire, so to speak, I get some heated phone calls as a result.
Here's why it's important to play the game by the rules.
TUCSON, AZ—A federal grand jury in Tucson returned an indictment against Juan Delgado of Tucson, Ariz., charging the defendant with four counts of wire fraud.
According to the indictment, Delgado received over $1 million in loans relating to the refinancing of three separate Tucson properties from March 2006 through July 2007. In obtaining these loans, Delgado submitted loan applications that contained material false information including falsely inflating his income and/or failing to disclose a liability. At the time of these loan transactions, Delgado was a loan officer. Each of the properties specified in the indictment went into foreclosure.
An indictment is simply the method by which a person is charged with criminal activity and raises no inference of guilt. An individual is presumed innocent until competent evidence is presented to a jury that establishes guilt beyond a reasonable doubt.
A conviction for wire fraud carries a maximum penalty of 20 years’ imprisonment, a $250,000 fine or both for each count. In determining the actual sentence, the judge will consult the U.S. Sentencing Guidelines, which provide appropriate sentencing ranges. The judge, however, is not bound by those guidelines in determining a sentence.
The investigation preceding the Indictment was conducted by the Federal Bureau of Investigations. The prosecution is being handled by Jonathan Granoff, Assistant U.S. Attorney, District of Arizona, Tucson.
CASE NUMBER: CR-11-3886-TUC-RCC
RELEASE NUMBER: 2011-254(Delgado)
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I'm Mike in Tucson, your preferred Tucson Arizona Mortgage Lender
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SUNSTREET MORTGAGE LLC ~ Correspondent Mortgage Bank
Offices in Mesa, Tucson, Sierra Vista & Nogales
It is sometimes difficult for self employed people to get a mortgage.
I never understand why a broker puts their life in jeopardy for one deal. Makes no sense to me.
Mike
I think we are going to see a lot more of this type of mortgage fraud.
Good luck and success.
Lou Ludwig
There is always more than one legal way, yet so many chose to cheat!
There is no way that the time necessary to get it done leagly would have taken 20 years or that the extra cost would reach 25 points!
Talk about stupid crooks! What makes this fool wrose than most is that "from March 2006 through July 2007" we could finance almost anyone with a pulse for only a few dollars extra.
Bill
Not a smart thing for someone to try and cheat -- but alas they keep trying don't they -- all the best.
Better if we all "stick to the guidelines", that's why they are in place...... Delgado probably never had a good night's sleep after submitting the fraudulant apps.... interesting post!
I guess that's pretty clear about providing documented income right?
The self employed usually need to be cash buyers since mortgages are so difficult to get for them.
Wishing you and your entire family a wonderful Thanksgiving!!!!
I am working fraud reports for a major investor right now during this time frame. I will not be surprised if there are further MAJOR indictments in my area concerning appraisers, LOs and agents. Maybe even former homeowners.
Everyone be careful out there and "do the right thing!"
Hi Mike, you do a tremendous job of promoting yourself and the company on AR. This is a good piece of information to bring to the community and although I didn't know Mr. Delgado, his practices are probably all too well known. He's out of business and heading behind bars and soon others will follow. This shows the real estate community that we really are under heavy scrutiny to always do the right thing as it pertains to documenting all situations properly. I love your marketing and how you have put all the services to work for you. Take care,
Gee whiz! I had noticed that you hadn't posted in a long time, so when I clicked on the blog and saw the headline, I was terrified for a moment that it was you! Just kidding. Hope you had a great Thanksgiving!
GOOD MORNING MIKE! Yep - I read about this - wonder if orange looks good on him?
Good Morning Mike, an excellent warning for everyone in the industry. In many cases it is too late. The Feds are slow but they will 'catch up' in the future. Thanks for posting the information on the case, it is the first time I have seen it.