GREC REnews, Vol. 2, Issue 1 (Jan. 2006)

Georgia Real Estate Commission

GREC RENEWS

Volume 2, Issue 1 January 2006

2006 Dates to Note

Tips for Recognizing Mortgage Fraud

February 14, 2006 Trust Account Class Metro South Association of REALTORS (770) 477-7579

Georgia is the Number 1 State in Mortgage Fraud.

March 8, 2006

Unfortunately, there are common

Trust Account Class methods for defrauding lenders. Here are

Greater Rome Board basic indicators of possible mortgage

of REALTORS (706) 295-1727

fraud: You may be a party to mortgage fraud if:

1. the buyers pay more than the contract

GREC Disciplinary

price;

Sanctions

2. the loan amount is for more than the

purchase price;

3. new settlement charges at closing

were not noted or explained before

INSIDE THIS ISSUE:

closing or in the good faith estimate; 4. the information on the original loan

application has been altered;

Mortgage Fraud

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5. the buyer was asked to include false information on the loan application or

Complaints to GREC 2

purchase contract; 6. anyone is asked to leave certain

signature lines blank;

7. one of the required disclosures is

missing from the:

Focus on

a. Good Faith Estimate,

Terminology:

b. Special Information Booklet, c. Truth-in-lending Statement, or

"Mortgages & Security Deeds"

d. HUD-1 Settlement Statement; 8. repairs are required under the
purchase contract and the work is not

complete at closing and the seller gives

the buyer (or contractor) money to pay

Happy

for the repairs and the buyer keeps the money and does not do repairs;

New Year

9. a non-disclosed second mortgage is used;

from the
Georgia Real Estate

10. the buyer/borrower is required to purchase credit insurance (insurance to pay off the loan in the event of death or disability);

Commission
Suite 1000

11. the buyer sells the property immediately after closing at an inflated

International Tower

price (flipping); or

229 Peachtree Street Atlanta, GA 30303-1605

12. any of the parties involved (for 1

example; buyer, seller, real estate

broker, appraiser, title company

employee, attorney) receive a

kickback.

Those are the more obvious

circumstances of possible mortgage

fraud. If you are involved in a situation

that is suspect, report it to your broker

and contact appropriate authorities such

as the District Attorney or the Georgia

Department of Banking and Finance

(GDBF).

Since August 2001, GDBF's website

provides information on the number

of written complaints received on

licensees.

Go

to

http://www.state.ga.us/dbf/mortgage.

html.

The GDBF maintains a complete

listing of licensed Mortgage Brokers

and Mortgage Lenders and other

supervised financial institutions

under the heading Regulated

Institutions.

You can also search for a specific

Mortgage Broker or Lender licensed

with the Department.

To file a complaint with the GDBF, go

to http://www.ganet.org/dbf/complaint

procedures.html.

Written complaints should be mailed

or faxed to:

Legal and Consumer Affairs Division

Georgia Department of Banking and Finance

2990 Brandywine Rd., Suite 200

Atlanta, GA 30341-5565

Fax: (770) 986-1657

Real estate licensees must be vigilante in recognizing the signs of mortgage fraud. Heavy fines and/or imprisonment are the penalties. Continue to promote the ethical and professional standards of the real estate industry by reporting fraud.

Georgia Real Estate Commission
Suite 1000, International Tower 229 Peachtree Street N.E. Atlanta, GA 30303-1605

Volume 2, Issue 1 January 2006
Focus on Terminology: "Mortgages & Security Deeds"
A Security Deed is the most common financing instrument for real estate loans in Georgia. A Security Deed is also known as a Deed to Secure Debt, a Loan Deed, or a Warranty Deed to Secure Debt.

Remember:

The borrower and the lender are the parties to the Security Deed. The borrower is the grantor, the one conveying the property to secure the debt. The lender is the grantee, the one receiving conveyance of the legal title to secure the debt. The borrower retains equitable title to the property.

All words in blue and underlined are hyperlinks to the
referenced subject. Just Click on the blue
underline to go directly to that website page.
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A Mortgage only creates a lien on the property and does not transfer title. The mortgagor is the borrower. The mortgagee is the lender. Although technically incorrect, these terms are commonly used to describe the parties to the lien on the real estate that is secured by the Security Deed.
In order to be valid, a Security Deed must have a related debt. The Promissory Note is the document in which the borrower contracts to pay the lender the debt. The payor (borrower) and the payee (Lender) are the parties to this contract.
Lenders in Georgia want more than a lien (Mortgage) on the property. Lenders prefer a Deed to Secure Debt so that they have absolute conveyance of the title to the property and a Promissory Note attached to it. When the loan is paid off, the lender stamps the original Security Deed as "paid" or "satisfied" or records a Quit Claim Deed on the property releasing whatever interest the lender had in the property. The public records are then clear as to the status of the original lien.
Source: Paraphrased from The Georgia Real Estate Guide to License Law, Brokerage, and Related topics, A publication of the Georgia Real Estate Commission under grant form the Real Estate Education, Research and Recovery Fund, First Edition, 1995, All rights Reserved. pp. 40.1-40.4
What Causes a Person to Complain to the Real Estate Commission?
The Real Estate Commission must review all formal complaints coming into the Commission's office. Not all complaints result in an investigation. In fact, a small percentage merit formal investigation. Complaints range from minor miscommunications to serious trust account issues. The less serious complaints are often filled with such statements as the following:
1. He wouldn't return my telephone calls. 2. She didn't address us as Mr. And Mrs. 3. He stopped by our house unannounced. 4. I don't know why she waited two days to
present our offer. 5. He showed up in a running suit. 6. She talked down to me. 7. He was late for every appointment. 8. She turned me over to someone else for
everything. 9. He didn't explain what that meant. 10. She was rude about everything. 11. He wasted our time showing houses that we had no interest in. 12. We never could reach her. 13. He never seemed to care about the problem.
Complaints such as these clearly emphasize the fact that real estate brokerage is indeed a service industry. Common courtesy and basic professionalism can go a long way toward influencing the public's perception of the real estate brokerage profession.
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