Is inflating a payoff a CRIMINAL OFFENSE in GA?

[Jesse LeBlanc]

FACT: Borrower asks lender a "favor" to increase their payoff as a way to get hundreds of thousands extra back but NOT given back at closing on HUD, rather under the table directly from lender to borrowers after lender received the inflated payoff.

Is this in fact considered Mortgage Fraud? Is it some other offense? If so, would both borrower and lender be charged the same or just one party? What could this mean for the lender if exposed to OCC or FDIC?

please reply with actual law codes if it’s criminal. Please add supporting links, documents or links to sources etc to your response if possible.

[Kevin Sobilo]

@Jesse LeBlanc, a few questions:

1. Who do you think was de-frauded? There are 2 parties to the mortgage loan the borrower and lender and in the end they have both received what they should have from the sound of it.

2. What advantage do you think this scenario brings for the seller/borrower? I can't imagine the lender giving them the money back "under the table", because then the lender is paying income tax on that money!

3. What's your role in the situation and why do you feel so aggrieved by this situation? I'm guessing you are the buyer, but I don't see how even if true this would affect you. 

[Jesse LeBlanc]

@Kevin Sobilo In my scenario, to keep it brief, my funds were in escrow. Property didn’t finalize or close and my funds were to be sent back to me, however closing attorney already wired my funds from escrow to payoff a lien holder who later refused to send the wire back to the attorney. Further research, I discovered lender and borrower (seller) negotiated an inflated payoff, hints why lender didn’t send $ back because they now knew they’d be out the extra money since their borrower had already spent most of those funds.

[Kevin Sobilo]

Quote from @Jesse LeBlanc:

@Kevin Sobilo In my scenario, to keep it brief, my funds were in escrow. Property didn’t finalize or close and my funds were to be sent back to me, however closing attorney already wired my funds from escrow to payoff a lien holder who later refused to send the wire back to the attorney. Further research, I discovered lender and borrower (seller) negotiated an inflated payoff, hints why lender didn’t send $ back because they now knew they’d be out the extra money since their borrower had already spent most of those funds.
 

@Jesse LeBlanc, I still don't see what the point of any arrangement the seller/borrower and the lender had was.

The only thing I can GUESS is that by overpaying the lender grossly, they will receive that residual money after January 1st and be able to book the profits in a different tax year. So, the refunded money would NOT be under the table. Just trying to defer some of the income tax until next year.

May not be legal, but doesn't seem like it impacts your situation here. 

You seem to be focused on the wrong party. The CLOSING ATTORNEY is the one who owes you money! If you press them, they should pay you even if they have to do so out of pocket.

When money is in escrow it is legally still YOUR money and since you didn't close the deal you didn't sign anything giving them authorization to release it to anyone else. So, the attorney is on the hook for that money. They have a legal responsibility to you for how that money is handled.

For a small sum like that I would think they could pay you out of pocket and deal with trying to recoup it from behind the scenes on their own. If you made a complaint against the law office, I imagine they could be reprimanded or fined in some way. In addition, I see no reason you couldn't get a judgement against them for the money and force payment that way. Small claims court is pretty easy.

[Jesse LeBlanc]

@Kevin Sobilo I do grately respect your response but trying to stick to my questions.

 I’m already doing all of that, which is why I didn’t want to get into more detail and everyone get side tracked from my specific question with the facts given.  I’m specifically looking for responses with factual supporting proof whether it’s a criminal offense or not and what it could mean for the lender, less about my litigation.  

BTW we're talking several MILLION here not small chump change. Yes I have E&O claims etc in the works, yes I'm in litigation and we're underway for GA law of "Subrogation" stepping in to obtain a lien in place of prior lender.

But I’m still looking for answers to my questions with supporting evidence IF it’s a criminal offense (likely mortgage fraud) but also could there be further investigation of this bank by the FEDs or? 

[Kevin Sobilo]

Quote from @Jesse LeBlanc:

@Kevin Sobilo I do grately respect your response but trying to stick to my questions.

 I’m already doing all of that, which is why I didn’t want to get into more detail and everyone get side tracked from my specific question with the facts given.  I’m specifically looking for responses with factual supporting proof whether it’s a criminal offense or not and what it could mean for the lender, less about my litigation.  

BTW we're talking several MILLION here not small chump change. Yes I have E&O claims etc in the works, yes I'm in litigation and we're underway for GA law of "Subrogation" stepping in to obtain a lien in place of prior lender.

But I’m still looking for answers to my questions with supporting evidence IF it’s a criminal offense (likely mortgage fraud) but also could there be further investigation of this bank by the FEDs or? 

Very good. I'm glad you have the part of the situation that affects you in hand. I hope its resolved quickly for you.

Does not at all sound like mortgage fraud because nobody has been de-frauded of anything. You mention fraud, but never actually describe who is the victim or how.

As I said, if anything I would suspect this is a tax deferment strategy. That is where I suggest you look. Call the IRS and ask them. Since they would eventually pay the taxes on the money (assuming I am correct), I doubt this would rise to the level of a crime per se. Many tax laws are open to interpretation and even an incorrect application abuse of the law is probably not getting anyone thrown in jail especially when they will eventually pay their taxes on the money. 

[Jesse LeBlanc]

For anyone else that responds, please refrain from assumptions, allegations or opinions. I’m not looking for responses from those who don’t know the law and only making assumptions.  Direct question, I’ll answer but stick to the facts with supporting documentation to your response please.

[Chris Seveney]

Quote from @Jesse LeBlanc:

FACT: Borrower asks lender a "favor" to increase their payoff as a way to get hundreds of thousands extra back but NOT given back at closing on HUD, rather under the table directly from lender to borrowers after lender received the inflated payoff.

Is this in fact considered Mortgage Fraud? Is it some other offense? If so, would both borrower and lender be charged the same or just one party? What could this mean for the lender if exposed to OCC or FDIC?

please reply with actual law codes if it’s criminal. Please add supporting links, documents or links to sources etc to your response if possible.

 we need more information as what you wrote in your posts is not making sense. Use the facts and we could get a better response with actual values. Also I am not following as an example:

1. I sell a house for $500,000. I owe $250,000 on it. The lender gets $250,000 and I get $250,000. If the lender sends to the title company the payoff amount was $400,000 and then they get $400,000 and the seller gets $100,000  then the seller is an idiot. 

Also you note: "Property didn’t finalize or close and my funds were to be sent back to me"

You got your money - whatever else happened really not your issue and you are speculating about everything else in the transaction - if you got your $, move on.

[Jesse LeBlanc]

@Chris Seveney, it's confusing becuase you may not want to believe what I've stated assuming the NORMAL process of a closing happend.  It's an ODD scenario not one closing attorney I've ever talked to has happend.  So just trust me when I say, I DON'T HAVE MY MONEY.

I already know I can go through litigation and eventually get the lien on the property and foreclose.  I'm not asking about all that. I'm just wanting to know about what MOST people probably have no clue about and hoping I can get someone who does to answer about is it legal for a lender to change a payoff KNOWING that there was no extra fees, interest etc that was actually owed for a higher amount with the purpose of then sending money they received IN ERROR to then pay their borrower back the extra money on the side.

Again, long story short, my well over 2M was sitting in escrow with a closing attorney.  The property didn't close and I was to get my wire back.  Closing attorney INSTEAD intentionally, possibly by pressure from the lender and fraud (TBD) to illegally use my money to pay off this other lender (WITHOUT ME KNOWING OF THE LENDER or LIEN even existed) who then refused to wire the money back to the closing attorney KNOWING that they increased the payoff and if they sent the money back to the attorney, they wouldn't have recouped the EXTRA money they gave to the borrower under the table, hints why they didn't send the money back.

Yes, I know what they all did was fraud and i'm in litigation etc, but my question still stands. Is KNOWINGLY increasing a payoff to an amount ABOVE what was technically and verifiably owed illegal for the lender and or borrower to do?

[Chris Seveney]

Quote from @Jesse LeBlanc:

@Chris Seveney, it's confusing becuase you may not want to believe what I've stated assuming the NORMAL process of a closing happend.  It's an ODD scenario not one closing attorney I've ever talked to has happend.  So just trust me when I say, I DON'T HAVE MY MONEY.

I already know I can go through litigation and eventually get the lien on the property and foreclose.  I'm not asking about all that. I'm just wanting to know about what MOST people probably have no clue about and hoping I can get someone who does to answer about is it legal for a lender to change a payoff KNOWING that there was no extra fees, interest etc that was actually owed for a higher amount with the purpose of then sending money they received IN ERROR to then pay their borrower back the extra money on the side.

Again, long story short, my well over 2M was sitting in escrow with a closing attorney.  The property didn't close and I was to get my wire back.  Closing attorney INSTEAD intentionally, possibly by pressure from the lender and fraud (TBD) to illegally use my money to pay off this other lender (WITHOUT ME KNOWING OF THE LENDER or LIEN even existed) who then refused to wire the money back to the closing attorney KNOWING that they increased the payoff and if they sent the money back to the attorney, they wouldn't have recouped the EXTRA money they gave to the borrower under the table, hints why they didn't send the money back.

Yes, I know what they all did was fraud and i'm in litigation etc, but my question still stands. Is KNOWINGLY increasing a payoff to an amount ABOVE what was technically and verifiably owed illegal for the lender and or borrower to do?

 ok, in your initial post you stated you got your money back -but it appears you did not get your money back. Is intentionally inflating a payoff a form of fraud - not an attorney but we do private lending and if you misrepresent the loan amount intentionally yes its fraud. Trying to prove criminal is challenging whereas going after them in a civil case is much easier to prove and the way to get your money back. 

Questions I would ask are:

1. Is the attorney licensed in the state? If so, get an attorney to file a complaint at the state board and have an attorney notify their errors and omissions policy. 

If this is in Georgia which is an attorney closing state  I can hook you up with some real estate attorneys who have teeth and are not afraid to get their hands dirty. 

[Jesse LeBlanc]

@Chris Seveney it is in GA. I do have my litigation attorney on our main priority of partial summary judgment for the lien. Everything else will come out long down the rd in trial but for now I’m just picking brains and finding more facts with supporting evidence for actual OCGA law and or other repercussions the lender could face once we finally bring this up or I begin working with the FBI and local authorities on the other matters in the case and want to have as much info I can get ahead of time to begin documenting any case law etc to expedite the process later. 

I’d still take your attorney contact though if you can PM me perhaps?

[Jay Hinrichs]

OK  this sounds criminal to me.. I would be going that route . complaint to the bar closing atrorney could get disbarred and thats a big motivation to settle with you.

I know on some of my payoffs the borrower might not use all the draw money but they paid for the money with advanced fees and Dutch interest so we can wire them those funds when it closes. My attorney blessed that one. 

[Kevin Sobilo]

Quote from @Chris Seveney:

Quote from @Jesse LeBlanc:

@Chris Seveney, it's confusing becuase you may not want to believe what I've stated assuming the NORMAL process of a closing happend.  It's an ODD scenario not one closing attorney I've ever talked to has happend.  So just trust me when I say, I DON'T HAVE MY MONEY.

I already know I can go through litigation and eventually get the lien on the property and foreclose.  I'm not asking about all that. I'm just wanting to know about what MOST people probably have no clue about and hoping I can get someone who does to answer about is it legal for a lender to change a payoff KNOWING that there was no extra fees, interest etc that was actually owed for a higher amount with the purpose of then sending money they received IN ERROR to then pay their borrower back the extra money on the side.

Again, long story short, my well over 2M was sitting in escrow with a closing attorney.  The property didn't close and I was to get my wire back.  Closing attorney INSTEAD intentionally, possibly by pressure from the lender and fraud (TBD) to illegally use my money to pay off this other lender (WITHOUT ME KNOWING OF THE LENDER or LIEN even existed) who then refused to wire the money back to the closing attorney KNOWING that they increased the payoff and if they sent the money back to the attorney, they wouldn't have recouped the EXTRA money they gave to the borrower under the table, hints why they didn't send the money back.

Yes, I know what they all did was fraud and i'm in litigation etc, but my question still stands. Is KNOWINGLY increasing a payoff to an amount ABOVE what was technically and verifiably owed illegal for the lender and or borrower to do?

 ok, in your initial post you stated you got your money back -but it appears you did not get your money back. Is intentionally inflating a payoff a form of fraud - not an attorney but we do private lending and if you misrepresent the loan amount intentionally yes its fraud. Trying to prove criminal is challenging whereas going after them in a civil case is much easier to prove and the way to get your money back. 

Questions I would ask are:

1. Is the attorney licensed in the state? If so, get an attorney to file a complaint at the state board and have an attorney notify their errors and omissions policy. 

If this is in Georgia which is an attorney closing state  I can hook you up with some real estate attorneys who have teeth and are not afraid to get their hands dirty. 

@Chris Seveney, I think you are talking about fraud where you as a lender lie about the payoff to extract additional money from the borrower. So, the borrower is the victim of the fraud.

In the poster's scenario, the borrower and lender are working together. So, the borrower is not a victim of anything and eventually gets the money they are owed. In fact the borrower would be part of the "crime" if there is one. 

Without anyone being victimized, I don't see how this would fit the definition of a fraud since its all agreed to and the borrower eventually gets the money they are owed as agreed.

[Jesse LeBlanc]

Thank you @Jay Hinrichs, I actually meant to tag you a bit ago but was working from my cellphone and wouldn’t let me find you. So glad you sent this over though.  

[Jesse LeBlanc]

@Kevin Sobilo mostly nailed it, and yes if the lender and borrower knew the attorney was paying them and knew the deal wasn’t going to close for the sake of them all getting money, and EXTRA MONEY on top with the intent of defrauding me for an even larger amount then yes, I’m still thinking it’s mortgage fraud.  But specifically looking to see if increasing a payoff for that purpose is legit considered mortgage fraud, that plus something else?  Who governs the bank and what would they do about that bank president who knowingly did this is more of what I’m looking to research. But def on to something here and I appreciate your reply there for sure!

[Kevin Sobilo]

Quote from @Jesse LeBlanc:

@Kevin Sobilo mostly nailed it, and yes if the lender and borrower knew the attorney was paying them and knew the deal wasn’t going to close for the sake of them all getting money, and EXTRA MONEY on top with the intent of defrauding me for an even larger amount then yes, I’m still thinking it’s mortgage fraud.  But specifically looking to see if increasing a payoff for that purpose is legit considered mortgage fraud, that plus something else?  Who governs the bank and what would they do about that bank president who knowingly did this is more of what I’m looking to research. But def on to something here and I appreciate your reply there for sure!

Was the price you were paying somehow tied to the mortgage payoff? If so, then that could be a fraud not really "mortgage fraud" because it really has nothing to do with the loan itself as you are not party to the loan just a simple fraud aka a deception to obtain something of value.

You didn't say you had knowledge that the law office holding the escrow was in on this scam. If the law office is in on it, then it would be fraud as well and possibly insurance fraud if they turn it over to their E&O insurance because E&O insurance is for mistakes not for intentional acts.

However, if your purchase price was not tied to the mortgage payoff and the law office was not in on it, then I still don't see a fraud only a GROSS error by the law office in releasing that money prior to closing. 

[Chris Seveney]

@Jesse LeBlanc

Were you the buyer and did the title company release the funds prior to closing?

[Jesse LeBlanc]

@Kevin Sobilo I didn’t state that because I don’t know it to be a fact yet. I’ve not discovered at this time that the closing attorney did this intentionally, she states she knew she sent the wire BEFORE things were closed and admitted it a week later after I discovered it all, but now 100% denies everything. So it’s beginning to sound more like they may have all been working together.

The SIGNED HUD by all parties we were provided didn't have the prior lien holder on it, so there is certainly deception, fraud there for knowing but intentionally leaving it off the hud by the attorney for sure and not disclosing it, but otherwise no, I've not confirmed yet if this was all of them working together or just gross negligence on her end and then a situation between borrower and lender no one at the time knew of that just happened to be multiple issues that were later discovered because of one mistake of the closing attorney when the lender and borrower might have thought it legit was closing and no one would have known and then all would have been fine.

and yes, TO THE PENNY, the amount they needed from me ended up to be the EXACT amount which was then wired to the lender to satisfy their lien, BEFORE FORECLOSURE BTW. 

[Jesse LeBlanc]

@Chris Seveney I was a Transactional Lender, single closings, buyers lender accepted seller carry back. They needed my funds to satisfy the hud, my money is escrow was NEVER to be wired anywhere but only remain in escrow to complete $ need for HUD along with buyers lender. My payoff was then added to the sellers side, I'd be paid back at the time of closing and seller and buyer then would take 2nd position from seller finance and my payoff on sellers side should have been wired back to me.

Never disclosing another lien on the seller side and nothing in the HUD, we theoretically had no concerns. If the buyer's lender didn't send their funds or deal fell through, I'd get my wire back.

literally the ONLY risk that I’d face, was exactly what happened. Not even wire fraud, we’ve wired to and from this same attorney on the EXACT same process months prior. Yes, the closing attorney wired our funds, the buyers lender backed out, too late my money was gone and attorney claimed for a week her escrow account was frozen and lied about what really happened until I discovered it and confronted her.

[Jesse LeBlanc]

Here was an old post from earlier this year I made on BP then all of these folks threatened me until I took it down.  But now I need to make another post to protect other lenders etc. See pic attached

[Joe S.]

Quote from @Jesse LeBlanc:

FACT: Borrower asks lender a "favor" to increase their payoff as a way to get hundreds of thousands extra back but NOT given back at closing on HUD, rather under the table directly from lender to borrowers after lender received the inflated payoff.

Is this in fact considered Mortgage Fraud? Is it some other offense? If so, would both borrower and lender be charged the same or just one party? What could this mean for the lender if exposed to OCC or FDIC?

please reply with actual law codes if it’s criminal. Please add supporting links, documents or links to sources etc to your response if possible.

How were you personally harmed? You might’ve already stated how you was harmed I just skimmed through the thread so if you already said my apologies. 

[Jesse LeBlanc]

Perhaps don’t skim @Joe S. and or make assumptions. Let me know if you have any valuable responses after you get caught up. 

[Jesse LeBlanc]

@Joe S. over 2.5M of my funds are sitting in another lenders bank who shouldn’t have it and I have no security interest in the property that was paid off. Not to mention the loss of income for 8 months, shutting down the business and many other trickling down financial problems because of it.  

But again, I’m not trying to get all into my case, I’m focused more on factual OCGA law and or other known criminal charges and references to them I can research along with more info from an experienced lender, attorney, judge etc who might know what I can later go after the prior lender as well for.

[Joe S.]

Quote from @Jesse LeBlanc:

@Joe S. over 2.5M of my funds are sitting in another lenders bank who shouldn’t have it and I have no security interest in the property that was paid off. Not to mention the loss of income for 8 months, shutting down the business and many other trickling down financial problems because of it.  

But again, I’m not trying to get all into my case, I’m focused more on factual OCGA law and or other known criminal charges and references to them I can research along with more info from an experienced lender, attorney, judge etc who might know what I can later go after the prior lender as well for.

 Sorry to hear that…😞 I regret for commenting earlier… I was going off your first original post.

[Jesse LeBlanc]

Quote from @Joe S.:

Quote from @Jesse LeBlanc:

@Joe S. over 2.5M of my funds are sitting in another lenders bank who shouldn’t have it and I have no security interest in the property that was paid off. Not to mention the loss of income for 8 months, shutting down the business and many other trickling down financial problems because of it.  

But again, I’m not trying to get all into my case, I’m focused more on factual OCGA law and or other known criminal charges and references to them I can research along with more info from an experienced lender, attorney, judge etc who might know what I can later go after the prior lender as well for.

 Sorry to hear that…😞 I regret for commenting earlier… I was going off your first original post.

 It’s all good my friend!  I thought you were just going to be a Troll and I wasn’t going to deal with it LOL.  I sincerely appreciate it sir 🤘🏼🦾

[Don Konipol]

The only thing I don’t understand is why the OP, with millions of dollars at stake, asks investors on a general real estate forum for answers to specific legal questions instead of asking an attorney specializing in mortgage law. 

“They needed my funds to satisfy the hud, my money is escrow was NEVER to be wired anywhere but only remain in escrow to complete $ need for HUD along with buyers lender. My payoff was then added to the sellers side, I'd be paid back at the time of closing and seller and buyer then would take 2nd position from seller finance and my payoff on sellers side should have been wired back to me.”

IF, I understand the OP comment I quoted above, his money was needed to give the appearance that the transaction was DIFFERENT in some way (hiding seller financing ?, making it appear as if buyer was investing more?, etc.) then it really was, in order (I guess) to induce a loan or some other “benefit”.  If so, then the OP, who’s claiming he was a “transactional lender”, was a part of said fraud.  Maybe my understanding of the situation is incorrect, and if so I will gladly stand corrected.