Please welcome our newest author, Fred Glick, mortgage broker and Realtor who works on both coasts (and carries two cell phones to prove it!), but most notably is a CNBC pundit who has gone head to head with industry heavyweights and held his own! In talking with Fred, I learned that he is very passionate about agents being as educated as possible in all facets of the industry and never candy coats the reality of the practice of home buying and selling.
I’m Amazed
It’s amazing how real estate agents still think that you can just tell their buyers to tell the mortgage guy that they are going to live in the property when they are not. Take fake agent Larry Blinkman. Larry, who buys his shark-skin suits right off the rack at Slimes-R-Us, is (or thinks he is) a master of the art of getting a deal through.
So what their client rents now a $5000 a month high-rise condo. Larry knows how to get him into the $80,000 row house. “Dude, just tell the mortgage guy that your ex-girlfriend now lives in the building and you have to get out because she is a freaking psycho (sorry, ladies). Then say that you think Crapville is an up and coming neighborhood and you want to be a pioneer by living there.”
He continues to tell his client, “And you’ll only need 3.5% down because you can get an (Federally insured) FHA loan and we’ll get the Seller to pay closing costs and gift you the down payment through the Neverminda Group where we play a little bit with the price..”
Little did he know…
Unbeknownst to Larry, this is the calendar year 2009 and the year that the Genghis Kahn’s accountants took over auditing of mortgage loans. Let’s point out Larry’s lack of understanding (I am not calling it fraud just yet because it has not happened. It might just be a conspiracy to commit fraud, but I forgot to stay at a Horiday Inn last night so I can’t play lawyer) of the structure.
First, If you are not going to occupy the property then don’t ask for an owner occupied loan. WHEN, not if they catch you, you have committed a FEDERAL crime and could possibly be hanging with Bernie Madoff for the next 149 years, 7 months, 24 days, 6 hours and 13.45 minutes.
Second, The jack-the-price-up-and-we-will-have-the-not-for-profit-give-you-a-down-payment-grant stuff is gone. All they were doing is jacking the sale price and taking a commission for washing dollar bills (Scarface reference).
Training & management of legacy real estate offices is AWFUL
The bottom line is that the training, mentoring and management of the legacy real estate offices is awful, that’s the major reason why fraud happens. Brokers need to do a bit more surgery on their agent’s deals. Question the mortgage person intently to make sure they are not conspiring with your agent and/or the buyer to put your license, reputation and freedom in jeopardy (not to mention your E and O insurance!).
The real estate industry has a sleazy reputation and this is a perfect representation of it. How about every agent (and mortgage and title person) who wants to keep their license go to a mandatory Fraud Prevention class live that is put on by the FBI. Or how about NAR requiring it?
Enough of the floats and motivational speakers…
Instead of spending big bucks on entertainment and motivation at a 70’s like convention that can have everything offered via something called the internet, spend the money on fraud prevention. Clean up your own house and get rid of the losers.
If NAR won’t do it, pressure your state to offer it as a required Continuing Ed class instead of a fung shei class (I swear, in Pennsylvania it exists!). I know there are people desperate for deals and will try to bend things to get it done but in the end, you will get caught.
But when you quit real estate, Larry, don’t telemarket me with guaranteed leads and tell me that you know the business and know what works for me. Don’t get me started on telemarketers!!
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You make an interesting point, but I don’t think this will ever stop fraud. There will always be someone out there that has to ruin it for everyone else. Although, one advantage to having a buyers market is it weeds out the bad Realtors.
You might not ever completely remove fraud 100% but where can we get 100% of anything. The key is to reduce the amount of fraud as much as possible. Fred raises some good points here. Training is essential. I don’t like being compared to a used car salesperson. I don’t even like the fact that a used car salesperson is still portrayed in that light. The truth is that a beautician is required to put in more hours for a license than a real estate agent. Is there something wrong w/ that? I guess in CA it might make sense since we are portrayed as being shallow and into material things more than sensible things like owning a home
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Fred – Welcome to AgentGenius. Your idea of making some sort of fraud training mandatory would be applauded by me. Add it to the mandatory legal and ethics updates. Being able to spot fraud is part of the equation and having a yearly update of new tricks, schemes, and scams would be an excellent idea since fraud is an ever evolving beast.
There is constant talk on AgentGenius about the education aspect of real estate and although I benefited from an “easy entry” I would gladly see the bar raised and even step up and go back for more training in order to keep my license. I think one of the first things that needs to be done is to improve the quality of the class first. I’ve been in classes that were absolute snooze fests, where I’ve corrected the instructor (who thought you should just Google images and grab them for free – if it’s on the internet you can use it kind of mentality), or where I sat there and watched other agents text away through the entire 2 or 3 hours only to quickly run out the door when the session was over, only stopping long enough to sign in to make sure they got their credit.
Fraud makes it even more important as well. Fraud is one of those things that can be slipped right under your nose without much notice and without the proper training to know what it can look like, it can be easy to become a part of it – unwittingly, but that won’t save you from the law.
Welcome aboard, Fred!
Recently here in the Augusta area, slimeballs where putting liens on properties just because they presented a CMA to the owners. Company was called SDA just so you know and if they show up in YOUR neck of the woods. Folks would go to closing and the title search would reveal the lien. Seller’s choice? Pay the lien from the proceeds, or lose the deal and go after them. They eventually got busted, but even an attorney that handled the liens is still in business locally.
Agree with Matt here – annual training on the LATEST predatory practices would help us police ourselves from the inside.
Navy Chief, Navy Pride
Fred, looking forward to reading and learning from you here on AG! Welcome my man!
TF
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Thanks everyone for the welcomes.
The fraud class I would suggest would be developed and actually taught by active, dark-suited, ear-piece wearing, gun toting, steely-eyed G men that can put the fear of the Justice Department into their brains.
This might not get rid of the bad guys, it might get rid of their thoughts.
Additionally, I am all for the barrier to entry being raised about 100,000 feet and the retesting of each and every agent ever 5 years to make sure they still have it.
F
Fred….my 24 hour belated welcomes also!
I love everything you said….raising the bar, self education and a higher level of internal policing, etc. The problem is I have that 60 mins piece from a couple of weeks ago still in my head about Medicare fraud…and I wonder what branch of our government could actually enforce the rules? For every couch bag who I read about in my paper going to jail (2 this week) I still see horrid things happening every day. When I actually spent 3 hours with my state Attorney General’s office on a particluar real estate fraud case, the AG rep pointed to a 5 foot stack of fraud files and said “well that’s really a shame but it just doesn’t rise high enough on the pile to warrant time from us.” I’m not sure it’s totally an education issue….it’s more of a bad character and greed issue. Perhaps I’m just too cynical to think it can get better.
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@Greg
How about we change the tax credit so that people are required to pay it back with interest at say 6%, they can monotize it to use as down payment and we take part of the money paid back to hire the many out of work attorneys to work for the Justice Department (and the FBI) or the States Attorneys Generals and work on mortgage and real estate fraud.
Oh, I forgot one other thing from my article. Each agent must pay for the FBI CE course in order to fund it.
Can’t say I am not fiscally conservative with my fraud prevention.
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Wouldn’t it be loverly if the real estate professionals were the only ones involved in and/or perpetuating the fraud. Of course, education would be the remedy….not.
Let us not forget the home buyer/seller who is willingly going along with or suggesting the course of action you suggest. Or the home seller that says his basement only got wet once in the last twenty years during the last hurricane or because he forgot to clean his gutters or the yard just needs grading. The home buyer who “forgot” they went bankrupt last year. Silent seconds. On and on.
The last State mandated Ethics class I went to was filled with 300 Realtors seated elbow to elbow who listened to an instructor drone on for three hours (it did touch on fraud, btw) Education may help the honest stay honest but it won’t do anything for the fraudster.
Welcome, to AG! I love your style!
Welcome to AG Fred.
I reported a local agent to the FBI. Seriously nothing has been done they are still out there committing fraud. Makes me sick.
I had a pile of documentation I turned over to them. The FBI agent didn’t really even understand real estate. I knew not to go to Professional Standards as they would have got a slap on the wrist.
So frustrating.
Look forward to your posts.