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HOW COULD A REAL ESTATE AGENT (OR ANYONE) COMMIT MORTGAGE FRAUD?

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HOW COULD A REAL ESTATE AGENT (OR ANYONE) COMMIT MORTGAGE FRAUD?

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A common way for a real estate agent to UNWITTINGLY commit mortgage fraud arises from the inspection process. A typical situation will help illustrate the risk: A seller and a buyer reach mutual acceptance on a purchase and sale agreement. The agreement is subject to a buyer’s inspection. The buyer inspects the property and discovers defects that the buyer wants repaired. The buyer’s agent drafts a Form 35R (Inspection Notice for Form 35) and requests repairs. Instead of completing the repairs, the seller replies with a financial concession in the purchase price in lieu of the repairs, and the parties agree to a lower purchase price reflected on a Form 34 Addendum. Buyer’s agent sends the Form 34 to the lender, but because the parties did not reach any agreement on Form 35R and it is thus not a part of the parties’ contract, the buyer’s agent does not send Form 35R to the lender. In this example, buyer’s agent has omitted information about the condition of the property that was include

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