Avoiding mortgage Fraud

[Mark Reit]

I am in the middle of 2 simultaneous contract, let's call it 1 and 2. 1 was a contracted signed a while ago, but closing has been delayed. We expect to close next week.

In between I signed a contract for another property, where the seller is the mortgage broker (not the one for the first property) (mmm... may be I should not have done that).

The problem is that when I told mortgage broker 1 that I signed a contract for another property and broker 2 pulled the credit he got upset (may be rightfully) because now we will have to disclose that new contract and explain we will be having new debt. We had to wait for commitment from broker 2 (which we just got) and we will now be able to close next week.

The issue is that broker 2 suggests that I should not fully disclose the fact that I have a signed contract and a mortgage application with broker one, but rather that I should just explain "shopping for mortgage" regarding the credit inquiry of broker 1. 

I obviously feel a little reluctant to say that, rather than disclosing fully that I have a signed contract and that broker 1 will close before broker 2. He doesn't want me to do that because he is selling his own house and wants to close.

Am I allowed to do that, since right now, no new line of credit was open (as broker 2 suggests) or do I have to disclose this (as broker 1 required me to do even though I did not close with broker 2).

Thanks!