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- [00:01]
A
What's going on, everyone? Welcome to Real Talk Real Estate. This is Mortgage Monday. I'm David Green and he is the dashing Christian bachelor. Christian, how are you today?
- [00:08]
B
Doing pretty good. We got another one coming at you guys on a, whatever Monday. This one gets published on.
- [00:14]
A
Yes, well, it's the mortgage Monday. If it's a Monday and they are here for it. All right. Today's show is about mortgage fraud, as you could probably tell from the thumbnail title. And we're going to be talking about how you can get in trouble for mortgage fraud. What is not mortgage fraud? What makes it mortgage fraud? All things fraud so that you know where the lines are and how to stay in compliance. And I'm excited about it. So let's get this thing kicked off. Christian, first off, let's talk about some common misconceptions with mortgage fraud. And I, he didn't know I was going to ask him that. So I'm going to give you a little bit of time to think about some common ones. You see, but there is an obvious one when it comes to mortgage fraud and that's that it is fraudulent to get a primary residence loan and then move out of the house. Are people that believe, like if you buy a house as a primary, you're legally obligated to live in it for a year. And some people even think you have to refinance it if you ever want to want to rent it out. I get these questions on seeing Green pretty frequently. Can you bring some clarity on what your legal requirements are when you are applying for a primary residence loan? Because obviously these have lower down payment requirements as well as better interest rates.
- [01:20]
B
Yeah, you got to, I, I'll make it really simple for you guys. When you close, your intent is, is recorded on like an official legal document that your intent is to occupy the property within 60 days of your closing. So you got two months to move in and you will remain in the property as your primary residence for 12 months. If you get repositioned for work or obviously change of life circumstances, there are exclusions where you can request to move out early, but it is not supposed to be an investment tool. So, like you're not supposed to be able to primary buy a primary every month. Like there are strict rules in place to avoid against that. Because the way that underwriters and lenders see it is if you're buying a rental property, buy rental property right now. We preach a strategy that very strictly stays within the rule set, which we preach the one house a year strategy that means you can buy a house every year because after 12 months you have fulfilled your primary residence obligation. You will never hear us say buy a house every month. That's where you get in trouble.
- [02:25]
A
Yeah, so that's a great point. Like people assume that because we say buy a house every year, that means you can't move out of your house. It just means it's very hard to get a new primary residence loan within the 12 month period. But there are extenuating circumstances. So can you describe what some of those might be? If somebody's like, well, I moved into the house but X happened, I have to move out and get another one.
- [02:47]
B
Yeah, ones that we've gotten approved. Now always talk to your lender. These may not apply across the board to you, but a lot of military members that get, you know, redeployed for work. If you accept a new job, you know, that increases your quality of life in a different state and you have to move. We've had people, you know, have, you know, the unfortunate death of family members where they have to move back home and take care of somebody. You know, we've had medical issues. You know, if you got to go be around a certain caregiver or something of that nature. What typically does not get approved is, oh, I want to move down the street. Like how are you justifying it? You're in the same school district. There's no change to your, your life. Like, you know it. So it like a lot of times like you're, you're moving away, right? It's usually a location based thing. Like if you have a job in California, you got hired in New York for a really good paying job. Like sure, we, we get it, but you're not going to, you know, have a job in Miami and move to Hollywood, Florida. Like you're like 15 minutes away. What are you doing? Right?
- [03:52]
A
You don't want to move to Hollywood, Florida under any circumstances whatsoever because they have the most horrible city government you could ever imagine. But yes, good example.
- [04:00]
B
I thought I, I thought that was going to get a comment. That's, that's, that was an interesting station.
- [04:04]
A
He's rage baiting me right now, folks.
- [04:05]
B
Yeah, that was an interesting city to choose. But for those who don't know, David's got a very interesting investment going on in Hollywood that we're trying to figure out. But regardless, you know, if basically it comes down to like, does the move make sense, is it warranted and do we believe you? Right. I'll use the classic example. I always do. We had a Client. I won't name names. He lived in a three million dollar house in San Jose. Those of you who know the Bay Area, San Jose, Silicon Valley, tech capital of the world, right, David, you'll get a kick out of this, but he wanted to buy a triplex in Stockton. Those who don't know Stockton, it's kind of like the butthole of California.
- [04:44]
A
And where. And where you're trying to buy a triplex in that area is probably like, what's the center of a butthole?
- [04:50]
B
Well, well, David, our. Our tech guy, who was living in a $3 million single family, was trying to convince us that he is going to move into the triplex in Stockton. The triplex was being sold for 450,000, by the way. So imagine giving. I follow the podcast. I'm investing. I'm going to house hack. And what do you think the underwriter told you?
- [05:11]
A
I don't believe you get told to go touch grass.
- [05:14]
B
Yeah, yeah, yeah. So obviously that's a hugely. Like. Like that. That's a super extreme. Right. But the same concept is still there at its core of like, is this a warranted and believable move? Right. Which is usually why we coach people on how to, like, level up when you buy a new house and make it a believable move and, you know, things like that. But ultimately, I can't give you a cheat sheet here. Talk to your lender. If you are considering having to move out prior to your 12 months, or if you're trying to strategize what is allowed, you should talk to your lender before making any hasty decisions.
- [05:48]
A
Yeah, there you go. I've had that happen to me before too. With the primary residence that I bought in California. My lender was like, yeah, we don't think he's doing it. It's too far away from his job. It's like, what? I don't even own a house and they still tried to deny me for like an FHA loan. They're like, it's like an hour and something away from he works. And I think I declared that where I was living was like, it was like 10 minutes away from where I worked because I was living in the Oakland hills, but I was renting a room. It's like, yeah, I went from renting a room to owning a house. My. The guy that I'm renting the room from has to move out. I have nowhere to live. Like, why would. Anyways, it was a. I had to write like a really long letter that basically said my job used to have me report to Oakland. Now it has me reporting to this area instead and it's closer to where I'll be. And it finally got accepted. But yeah, you're the right broker can give you some good advice on how to do this. The wrong one's just going to tell you no and you can't do it at all. But it is good to know these things. What are some other common forms of things that people try to push the boundaries of where they can get in trouble for? Mortgage fraud?
- [06:49]
B
Believe it or not, there's been a surplus in people using DSCR loans for primaries. And it's funny because DSCR loans have higher rates than primaries, but they're easier to qualify for. So they go find a property that can cash flow and then they go move into it. You sign a very specific clause and a DSCR loan that you will. It's the exact opposite. You will not occupy it as a primary. It is not underwritten that way. It is not intended for you to live. There isn't.
- [07:11]
A
Yeah, because they want to know that you have income coming from the house. They don't want you living in it because that would make it harder for you to pay it back. And they haven't checked your ability to pay it back as much as what the house is going to make.
- [07:21]
B
100%. That's exactly right. So I mean, occupancy is by far and away, I would have to believe, the largest type of occupancy fraud. I mean, there's people who don't disclose debt. So like if you have, you know, like if you're borrowing your down payment, you know, things like that. And like you got a, a personal loan and then you let it season in your bank account for 60 days. Like technically you're supposed to disclose if that bar if that money was borrowed. Right. There are loan programs that allow you to borrow your down payment, but for standard, traditional, conventional ones, you know, there's people who try to, you know, do weird things with quick claim deeds. You know, the. I don't want to call them out. But the subject to world, you know, sub two is not legal, technically speaking. You know, with most it is for, I guess VA and fha you can assume alone. But if you're not assuming a loan and you're just on title of somebody else's property, like you're not supposed to do that. Right. I'm probably going to get a lot of hate in the comments for that because they have a very devout fan base. But it is true. That's why? You know, all the people who teach you how to do it, the first thing they tell you is make sure you don't talk to your lender about this. If the first piece of advice is withhold information from your lender, it's probably questionable. Questionably legal at best. Right. Other forms, mortgage fraud.
- [08:45]
A
I got one for you, if you're thinking about it. What about the people that we've come across that put a house in escrow, said it was going to be their primary, posted it on Facebook, Marketplace for Rent.
- [08:57]
B
Oh, yeah.
- [08:57]
A
And then got caught. You want to tell some of those stories?
- [08:59]
B
Yeah, we're. We're refinancing one person out of it literally right now. If he's listening to the show. I see you. But. But, yeah, we had a guy that exact story, bought a house, primary residence, showed us he's moving in. The property was vacant, you know, ready for him to go. He had a job nearby. Everything was good. And it was on Zillow for Rent literally the day after we closed. Guys, for the love of God, do not do that, please. It is very bad for your lender. Very bad. That becomes an unsellable loan. It's. It's bad for you because you can technically get, like, blacklisted and not get a loan to get you again.
- [09:43]
A
Did you hear how mad Cinder is about someone doing this?
- [09:45]
B
Yeah, he. He does not like mortgage trotting.
- [09:47]
A
He's like, oh, this. I've heard this before. And I do not. Like, that's how it makes him feel. Drives him crazy.
- [09:52]
B
Like that this is the mortgage fraud. But. But yeah, yeah. I mean, just, like, if it's questionable, like, I would, like, if there's ever an industry that I would like. Not that I would mess around with legality anywhere, but, like, I definitely wouldn't do it. In the mortgage world, like, there's so much regulation, guys. Like, you're gonna get caught, you know, like, it's. It's just. It's also not worth it. Like, you're talking about hundreds of thousands of dollars with most properties, right?
- [10:19]
A
Yeah. But a lot of people don't think that the lender is going to put that much work into this.
- [10:25]
B
That's true. That's what a lot of things.
- [10:27]
A
Right.
- [10:27]
B
A lot of these lenders that.
- [10:29]
A
That advice, they're digging to see if this happened. Have you heard any stories of people like. Like having someone drive by the house to see if it's been occupied after? Can you tell some of that?
- [10:40]
B
100%. Yeah, they'll send people out. I Actually, believe it or not, there's actually a huge movement going around. There's a couple of companies actually starting around this basis of using AI. Using AI to go like call into the utility company for you with like an automated voice saying, oh hey, I'm so and so confirming the utilities are paid for this property. Can you tell me like who paid it? You know, things like that. Right. And lenders have a certain percent of access that they can get to your stuff, you know, for things like lien filings and stuff like that. Like if they call your cable company and your primary residence cable bill is in somebody else's name, that's a red flag, right? Like who's paying your cable bill now if it's like your dad or something, okay, that's fine. But like usually if you're a brand new home buyer, like the cable bill is going to be in your name. It's pretty clear.
- [11:26]
A
Right.
- [11:28]
B
But I've heard a lot, I've seen a lot of companies starting to like pitch themselves of like, you know, we've created an AI, you know, occupancy fraud checker. And you know, all you do is you sign up for our service and we'll tell you if your client moved into the house 30 days, 60 days post closing. And like that's kind of scary because now you're not even arguing with people, you're arguing with robots telling people that you live in your house or not. You know, so that's a whole. Regardless of how you feel about AI, that's scary to me because robots.
- [11:55]
A
But you know, oh yeah, it's very. I don't know how this is going to work out. Like we already had the issue of people pretending to be us online. I had several friends of mine, cop buddies that I knew, people I known for a long time that got scammed, that sent $50,000 to a scammer thinking they're investing in a deal of mine that I never talk to these people as a fake profile. It's horrible how easily that happens. I don't know how AI is going to make this even worse. Anything else that people should know when it comes specifically to mortgage fraud, that maybe they're getting advice from other people about how to do something. What about with the, the pad split model like rent by the room? Do you, Are you familiar with any restrictions when it comes to ways that you can use a house that people need to be aware of if they're going to rent out rooms?
- [12:39]
B
No. Yeah, I mean you could do it if it's Your primary, you can have roommates pad split is, is legal. Obviously check with your city. Like, you know, jurisdiction, like the town may not like it, but there's not lending guidelines saying you can't have roommates for sure. Like that's, that's allowable. You know, a lot of, I mean short term rentals are a big one. Like can you short term rent? A lot of people break short term rental rules. I still see Airbnbs all over Lake Tahoe. Like South Lake Tahoe outlawed Airbnbs. You can't do it anymore. And like try to go stay in an Airbnb in Tahoe, you can do it super easily. I, I don't know if people are just paying the fee or whatever's going on, but who knows?
- [13:16]
A
But so what about if somebody got a short term rental, used a DSCR loan or secondary home, maybe not secondary home loan, but investment property loan, anything like that and they want to move into it a year later or in the future. Like, you know what, I want to make it my primary. Is that allowed?
- [13:33]
B
Not on a DSCR loan. You're not allowed to DSCR loan and use a pri. Use it as a primary as a conventional investment property. You can, you can move into properties after a year that really anything conventional, you sign your commitment for like a year. Like this is going to be this property for a year. Right. Second homes per year, primaries, investment properties. You could absolutely move into an investment property, you know, in the future if it's yours and you qualified to buy it. It's harder to qualify for primary. So like really the, I'm sorry, hard to qualify for investor is really the thing they're trying to avoid is you getting a loan product that is better than what you should have got and putting a down payment that is less than what you should have got. So like they're much less concerned about you moving into a rental because you put more down and have a higher rate.
- [14:20]
A
Right.
- [14:21]
B
Like they're trying to make sure they underwrite it effectively. And like, you know, people like aren't really, I guess sometimes that can be a rare situation. But like 99 of occupancy fraud is I bought a primary and I rented it out. Like it's almost every single one because they're putting 3 and 5% down. You know, if they're getting down payment assistance, even 0% down, they're getting really good rates and they bought an investment property. You're not supposed to do that. Like there's a reason why investment property loans exist, right? Yeah, I Guess it could happen the other way, though. But that, that direction is much, much more common.
- [14:54]
A
So what's your final piece of advice as we move on to our article today? For what people need to avoid when it comes to mortgage fraud that they may not even have known that they were committing?
- [15:07]
B
Be honest. Talk to your lender. Your lender will guide you. If you have a. I don't want to speak for every lender.
- [15:13]
A
Well, you could because you've read every single document in the Fannie Mae website because you're an anomaly of a human.
- [15:20]
B
The only one psychotic enough to actually read every word in the family.
- [15:22]
A
You just kind of made me scared, though, because there could be a lender out there who wants to close a loan and you say it and they don't want to blow it and they're just like, yeah, you should be fine. But if they don't know all of the guidelines, they could be wrong. I mean, I haven't really thought about.
- [15:35]
B
All the time. Happens all the time. David, we know a guy, you know, who, who I won't drop names, but commercial guy who had a lender in his pocket, who the lender was breaking the rules. I don't know. I don't know. Editor, cut this. I don't know if you want me talking.
- [15:54]
A
No, no, no, that's okay. You can say it like we just won't say any name.
- [15:56]
B
Okay. Okay.
- [15:57]
A
Yeah. So, okay, that is a very good point. This was a high profile case. I didn't even think about this. But the bank had a person on their side that was helping to break the rules and they got a very big trouble for it. And the people that did deals with him had no idea that this was happening. They were relying on that person's advice that this was fine. So that is a very solid point, that even if you do talk to your lender, if your lender is incompetent or if they just want to close that deal and they don't really care about the law, it's kind of like having a lawyer that's dumb. You could have a lawyer that still gives you bad legal advice. You're. So you could potentially get in trouble. Yeah, good point.
- [16:32]
B
100%. Your lender could walk you into mortgage fraud.
- [16:36]
A
Right.
- [16:36]
B
Be careful.
- [16:38]
A
All right, let's. Speaking about dumb, let's talk about a politician that recently, what a segue, did something pretty dumb. The New York Attorney General, Letitia James, signed the mortgage document that she signed that has her facing 60 years in prison. First off, I don't know what Circumstances get you 60 years in prison for this? I'm imagining that's like the maximum sentence. And it's probably a habitual offender, like a Bernie Madoff type thing. I don't know, Christian, maybe you would know. That might be a little sensational. But let's talk about what happened here. A one page document signed by the New York State Attorney general, Leticia James is at the center of the federal criminal charges for which she now faces 60 years in the pen. And the second home writer for her mortgage. Christian. What is a first home writer or a second home writer?
- [17:31]
B
It's basically that it's the easiest way to explain it. It's. I'll call it. It's the disclosure you sign where you certify like your occupancy. So an occupancy writer says, like this, all the things that we discussed. This will be my primary for the next 12 months. The rider is just the name of that form.
- [17:48]
A
Okay. It allowed her to secure a better mortgage rate from Annie Mac. What the heck? What's Annie Mac?
- [17:55]
B
No, it's just the lender.
- [17:58]
A
Why is it.
- [17:59]
B
It's funny because they, they. And so Penny Mac does the same thing.
- [18:03]
A
Yes. Okay. So they're purposely marketing themselves to sell like a government Freddie Mac. That makes me feel better. Why? I didn't hear it. I got very insecure right there. Like, how do I. How have I never heard of this new Mac? But they're doing that on purpose because they want to get the credibility.
- [18:17]
B
I have heard the same thing. Yeah.
- [18:19]
A
Netting her nearly $19,000 in mortgage savings, according to federal prosecutors. Do you think they're referring to. Or you think they're referring to the interest over the life of the loan?
- [18:28]
B
Probably the interest over the life.
- [18:29]
A
Yeah. That's also really not that much, if you think about it. To be fair. Over a 30 year loan, $19,000 is not a huge amount there in reality. James. James's serious serial criminal grand niece. I've never heard that phrase used before. Serial criminal grand niece. Nakia Thompson, who moved in soon after she closed on the house. So she bought a house with a primary loan, then her niece moved into it instead of her. I wonder if that could possibly be her defense here. Like I didn't intend. I was going to move into it, but then I had my niece move into it, which is like me instead of a tenant. Much of the strength of the case, which alleges James committed federal bank fraud and made misstatements to a financial institution, could rest on whether Thompson was paying Rent. Ooh, I sound like I knew that was coming, but I didn't. We try to blind read these things because that's exactly what I thought. If she's not collecting rent, you can't prove that the intent was to defraud. You could just be like you did something stupid. But that's not the same as intending to commit a criminal act, which is probably that. Intent word, I'm guessing, is what the prosecution is going to have to prove. But the relative of New York. Stop. Prosecutor told a grand jury in June that she was living rent free in the three bedroom, one bathroom house. Well, she's also told to say that James's signature appears at the bottom of the mortgage rider dated August 17, which explicitly lays out what the home can cannot be used for. And there it is. A picture of a mortgage writer. There you go. Among the covenants on the writer were a requirement that James would occupy and use the property as a second home. Okay, more is coming to light. Christian, can you explain the difference between a second home and a primary residence?
- [20:05]
B
Yeah, primary you occupy more than 50% of the year. A second home, you occupy less than 50% of the year.
- [20:10]
A
Right now we're going to take a quick break from the article, explain to people why they should apply for a second home loan with the one brokerage and what the benefit to them doing so would be.
- [20:25]
B
Second home loans, number one, 10% down. So it's pretty big lower down payment than an investment property. You have to occupy it at least two weeks of the year and you can occupy it all the way as much as up to less than half the year. So what, 179 days or 180 days, whatever. Half the years. It can't be more than half the year because then it's your primary. Wherever you spend the majority of your year is your primary residence. That's your mailing address. That's where you get your pay stubs, your bank statements, all that. A second home can be rented out when you're not there, which is nice, but you are intended or required to occupy it for, like I said, at least 14 days.
- [21:09]
A
Okay, so a second home is something that you could put 10% down, not 20, which is pretty good. And you get a better interest rate than an investment property, but not as good. It's kind of like right in between primary and investment, but you have to occupy it. How many days did you say?
- [21:23]
B
At least 14 and a maximum of less than half of the year.
- [21:26]
A
So you got to occupy it at least two weeks of the year, two weeks vacation, that's like a normal thing. But you cannot occupy it for more than half the year because then it would become a primary loan.
- [21:35]
B
Right.
- [21:35]
A
Any restrictions to renting it out when you're not using it?
- [21:40]
B
There's some weird ones. It's not supposed to be on professional property management. It has to be available for you to rent, you know, because you have to use. Yeah, it has to be available. So, like, you can't sign a 12 month lease with somebody for a second home because then you can't occupy it.
- [21:55]
A
Right.
- [21:57]
B
It works good for Airbnbs because you can just, you know, like, really the loan program was intended for like grandma's lake house by the, you know, in the mountains or whatever, you know, like, that's why the loan product exists. It's a home that your family uses for a portion of the year that you may rent out a little bit when you're not using it. Obviously, with the surplus of Airbnb, who knows if that guideline changes here soon? But.
- [22:17]
A
Well, that's my question would be on this. Sorry, everybody, for the rabbit trail, but I think everybody's listening is thinking the same thing as me. They're not as worried about Latisha James as they're like, hey, man, can I do this? If you buy a second home and you do use it two weeks out of the year, like, that's not like, let's say I wanted to use this loan when I bought in Hawaii. I didn't, but let's say I did and I could stay there for two weeks or more, but I'm not going to live there. Can I put it on Airbnb and rent it out when I'm not using it legally?
- [22:45]
B
Yes is the answer.
- [22:46]
A
Okay. There's no, like, six month limit of how long you can rent it out on.
- [22:50]
B
There's a. The wording is very weird here because the wording for the rule was created before Airbnbs were popular. What the wording technically says is you have to occupy it for 14 days and it has to be available for you to occupy up to that six months. Now, it defines on how you. Depends on how you define available. I mean, that could mean you have it on Airbnb and you, like, just block off the days which, like, can, you know, some letters may interpret that as, oh, it has to be vacant for half the year.
- [23:22]
A
Right.
- [23:22]
B
I don't know if I believe that because it doesn't sound like that's in the spirit of the underwriting guidelines. But in all reality, I have never had somebody get in trouble for this. The only people who've got in trouble for second homes is you close and you have somebody sign a 12 month lease. Of course, then it's definitely not available for you and you can't occupy it for 12 for two weeks.
- [23:40]
A
And I'm guessing that what someone could do is say 12 month lease, but you have to vacate it for these two weeks. People probably tried that, which may be why they're saying, what? No. Professional property management. What's the phrase that you use?
- [23:52]
B
Or it has. It has to be available to you. Right. It can't be like the occupancy can't be determined by somebody else.
- [23:58]
A
It forbids you from giving a management firm or any other person or entity any control over the occupancy or use of the property. Correct. Oh, wait, this is if it was because it's primarily for her own use. So that would be if you, if you let a property management company take it over and had someone sign a 12 month lease, you'd be violating that, if I'm understanding this correctly. Okay, but if you are like, it's on Airbnb and they don't have control over the asset, they can just book it. But you're like, hey, no one's using it.
- [24:27]
B
That's when I get there that it has to be, you know, possible to. Made available to you. Right. Like, if you can make it available for you to occupy for up to six months of the year, then that seems like it fits the spirit of the guidelines. Which means, can you book off half of your year? Sure you can. Right. If you're running your own Airbnb, you can book off half the year if you want to. Absolutely. You know, you can deny bookings. You know, it's not in control of anybody else. You're not signing long term leases. Like, you know, that's. To me, that's how I interpret the spirit of the world. I do think this is probably a part of the underwriting guidelines that will probably have an overhaul here shortly because.
- [24:59]
A
This case is getting so much attention. Yeah.
- [25:02]
B
And. And mainly because just Airbnb has, you know, rushed to such significance in recent years. So I, I just think there's probably some changes for the second home loan program coming, but as it stands right now, that is how the underwriting guidelines read.
- [25:17]
A
Thanks, Latisha. Ruining a good thing here. The document that she signed forbids any shared ownership arrangement requiring her to rent the property out or give a management firm or any other person or entity any control over the occupancy or use of the property and that it would be primarily for her own use. So if you hear this and you go, oh, a primary residence is. I can't rent it out. Not true. It has to be primarily for you. You can still rent out the rooms to other people. You can still rent out your primary residence. Other people when you're not there. You can make your home available on short on Airbnb. Like, I'm going to do that with the house that I'm living in right now. I'm going to have it decorated as a short term rental. I'm going to lock off the podcast room and when I leave town and go somewhere, I'm going to put on Airbnb and I'm going to collect money and then have it cleaned when I get back. So that is not against the rules if it's your prime residence. But it has to be primarily for me. I have to be living.
- [26:07]
B
You have to occupy it for more than half the year.
- [26:09]
A
There you go. And it goes so far as to include a section saying James would be considered in default on the $109,600 loan. Wow, that's a pretty low loan amount. If she or anyone else acting at her direction gave inaccurate information or statements regarding her occupancy of the residence as a second home, much of the case could hinge on Thompson's statement that she wasn't paying rent. I wonder how hard that is to prove, though. I feel like you would just get a warrant to search her bank statements and see money coming in.
- [26:41]
B
Exactly.
- [26:42]
A
Money going out from the niece. Yeah, yeah.
- [26:45]
B
They will submit their. Her bank statements. I. I would have to believe exactly.
- [26:48]
A
What they would do. Prosecutors said in their indictment that James filed tax documents showing she spent zero days in the house and that she received thousands of dollars in rental income. Oops.
- [26:56]
B
Well, there you go.
- [26:58]
A
Wouldn't that suck though, that you're like, hey, I declared my taxes to the IRS legally because I wanted to with withhold the law. And then that becomes evidence to be used against you in a mortgage fraud case that you probably why Trump refused to.
- [27:11]
B
Because his tax returns are probably. Holy cow. So, yeah, I'm sure if you look through Trump tax credits long enough, I'm sure you'll find something with this. You know, thousands of properties he has.
- [27:21]
A
Right. She also claimed exemptions for money she spent on the property, which we would describe as a write off. So that is something you can only do on an investment property. You cannot write off things on your personal property against your income. But you can wr off things if it is an investment property against the income, because you would be paying taxes on the income. So I think what they're saying here is that her tax statement show that this was used as an investment property, but the mortgage document said it couldn't be used for that reason. Now, let's get into the actual details of this case here. This is not something that the government is running around looking for everybody to be doing. I don't think that they care. In general, my understanding of this case is that Leticia James spearheaded a case against Trump, and I think it was over his Mar A Lago reporting of what he said the property was worth. There was a huge hullabaloo the last time Trump was running for president where he applied for a mortgage or some form of financing and he needed to provide a. What's the net worth document called that I can't think of right now? Not a personal history statement.
- [28:29]
B
Personal financial statement?
- [28:30]
A
Yes, personal financial statement at pfs, which is a list of all of the assets that you own, all the money you have in the bank, all of your sources of income, the uses to determine your net worth, to see if you are able to support the loan they're going to give you. And his Mar A Lago estate, he claimed is worth a certain amount of money. And then when they wanted to stop him from becoming president, they went, they being his adversaries, whoever that was, which I think Leticia James was a part of, and said, no way. That thing's not worth that much money. We hired an appraiser or a BPO or something to say it's worth way less. So now, this was subjective because you don't have a zestimate for something like Mar A Lago estate. Right. Trump's legal team said, no, it's worth this much money because it could make this much income if Trump wasn't using it as primary residence and Trump owned it, which makes it worth more. And there's all these other ones that are like the comps they provided were bad. They didn't have as much land or they weren't in the right area. And the people that were prosecuting him said, no, it's not worth as much as he said he committed mortgage fraud. And the goal here was to stop him from becoming president, try to put him in jail. What isn't being said in the article so far is there's a little bit of retribution here. Letitia James, who went after President Trump for committing mortgage fraud, was Found to have letter of the law, committed mortgage fraud. Now, spirit of the law, does the law care about this if it's not Letitia James and she didn't try to get the President in trouble? I'd let you comment on that, Christian, if you think that's the case. Maybe with AI, the freaking irs or not the irs, but like the feds will be able to figure out how to prosecute people for mortgage fraud very easily. Maybe they'll find a way to be able to go through everybody's stuff and figure it out. But this isn't something that I think people should be shaking in their boots. Unless they've targeted the President of the United States and tried to put him in jail. That puts you in a position for a counterpunch, which this is a pretty gnarly one because I'm looking at this like $109,000 loan balance, approximately $19,000 that she saved over a 30 year period of time. That's like peanuts compared to what we see most of the time. And then she ran it. She let her niece live there. It wasn't even like she went and put for someone else to buy. Doesn't mean she didn't commit mortgage fraud though. And that's the point. Sometimes you can have the best of intentions and even be unaware. We. I think I can safely assume that Leticia James's loan officer probably did not say, what are you going to use the property for? Did not explain the form, did not say, hey, you're the Attorney General. Maybe we mind our P's and Q's on this a little bit. Maybe we look at this thing a little bit closer. I'm imagining if you were doing this loan for her, Christian, you'd be like, hey, you're a big deal. We need to slow down and we need to look at this thing and we need to make sure that everything is perfect because you're in the public eye. That's my take on it, though. What's your take?
- [31:08]
B
Yeah, I mean I really. That should be done no matter who the client is. But especially for the New York Attorney General, I think that an extra level of care should have definitely been given for sure.
- [31:18]
A
And this can happen when that doesn't go down so folks don't get popped for mortgage fraud. Use Christian and use a one brokerage loan officer and let us help you to avoid that. So what did we cover today? We talked about primary residence loans, what they're supposed to be used for and when they can be used differently. And just to highlight that, Christian, if you get a primary residence loan, you live in it and then you move out and decide you want to rent it out. Any issue with that?
- [31:42]
B
After 12 months? No.
- [31:44]
A
There you go. 12 months later, you can rent it out to somebody else. We talked about different ways people commit mortgage fraud. Sometimes knowingly, and how they get caught, sometimes unknowingly, just so you can avoid that. We talked about secondary home loans, also known as vacation home loans. Is that correct? Correct down payments on those, what you can use them for and what to avoid. We talked about investment property loans. We talked about DSCR loan. No no's the dscr. No no. And how to avoid that. And we talked about how Leticia James got caught. Christian, if people want to reach out to you, where can they go?
- [32:14]
B
If you don't want to commit mortgage fraud, you should follow me on Instagram and send me a message. Heonebroker is my handle. If you do want to commit mortgage fraud, leave me alone.
- [32:24]
A
That's a great line right there.
- [32:27]
B
I do not want to be involved in it. I got too many licenses to lose. But yeah, the one broker on Instagram or the one brokerage.com is our direct website that you can find out more about what we do here.
- [32:39]
A
There you go. You can go to davidgreen24.com, use the chat option, get a hold of me directly. People sometimes do that while I'm recording the show. Oddly enough, I always think it's funny when that happens. Send me a message. Tell me how I can help you build your wealth, what questions I can ask or answer for you. And if you'd like to be featured on the David Green show, head to David Gre green24.com Ask where you can submit a question to be answered on the show. And in one of these days, I'm gonna have Christian join me over there to help answer the questions. Christian, I know we went into overtime today and you've got to get back to work. I really appreciate you for being here and for all the hard work you're doing. Thank you for that. And folks, make sure you subscribe to the channel like the video and share it with somebody else who may not have gotten the best advice or is foolish enough to use a different loan company. We'll see you guys next week on Mortgage Monday.