Bulletin: FL000127

Date:
March 20, 2007
To:
All Florida Issuing Offices
RE:
Mortgage Fraud

Dear Associates:

Another real estate scam has surfaced over the last couple of months resulting in arrests being made at the closing table.  The scenario is similar to those we have heard about in the past.  As reported in the Tampa Tribune on December 15, 2006, the most recent scam involved an illegal immigrant attempting to secure a fraudulent mortgage with the help of an out of state mortgage broker.  As is typical in other scams, the sales price of the house was grossly inflated and a disbursement was to be paid to a company recently formed by the borrower.  The mortgage broker insisted the disbursement not be shown on the settlement statement.  In addition, he insisted the addendum showing the inflated purchase price was not to be sent to the lender.  Obviously, this practice violates both state and federal law.  Inconsistencies in the loan application prompted the lender to contact the FBI who arranged for a sting operation.  You can read the complete article at: http://www.tbo.com/news/metro/MGBXGDH4QVE.html

Unfortunately, this is just one of many fraudulent schemes being circulated in Florida and around the country.  Many of the schemes include payments to different types of entities and agents are often asked not to include the payments on the HUD-1 settlement statements.  Our intent is to increase your awareness and to raise a red flag any time you are asked to omit a contract addendum or a disbursement from the settlement statement.  If you are contacted to handle a closing with the above characteristics, please contact your local underwriter.

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THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None