# This Former marine should be jailed for mortgage fraud **URL:** \ **Category:** The BBQ Pit\ **Created:** [March 3, 2009, 12:10am UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081 "2009-03-03T00:10:27Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [March 3, 2009, 1:53pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/21 "2009-03-03T13:53:57Z")
> [@MOIDALIZE](#): > > I’m just going by the definition of common law fraud. Let’s look at the [definiton](http://www.lectlaw.com/def/f079.htm) of fraud. > [@](#): > > The term ‘fraud’ is generally defined in the law as an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury > or damage. He lied about a material fact in order to get the bank to give him a whopping pile of money that he had no intention of repaying. However: > [@](#): > > In other cases, when it is shown that a Defendant made a material misrepresentation [and/or omission] with the intention that the Plaintiff rely upon it, the Plaintiff must prove that his reliance was justified. If, in the exercise of reasonable care for the protection of his own interests, the Plaintiff could have learned the truth of the matter by making a reasonable inquiry or investigation under the circumstances presented, but failed to do so, then it cannot be said that he ‘justifiably’ relied upon such misrepresentations [and/or omissions]. Not to say that what this guy did was OK, (or that he doesn’t deserve to be foreclosed on) but the banks have a responsibility to do 15 minutes worth of research before writing a check for $347,000. They couldn’t have asked for a W2 or a paystub or a single set of bank records? In terms of being like a holdup, it’s more like he walked in, said he’d like to withdraw $100,000 from his account, and they gave him the money without verifying that he had an account with that amount of money in it. ---
**Author:** ![accidentalyuppie](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@accidentalyuppie](https://boards.straightdope.com/u/accidentalyuppie)\ **Post date:** [March 3, 2009, 2:04pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/22 "2009-03-03T14:04:11Z")
> [@Cheesesteak](#): > > Let’s look at the [definiton](http://www.lectlaw.com/def/f079.htm) of fraud. In terms of being like a holdup, it’s more like he walked in, said he’d like to withdraw $100,000 from his account, and they gave him the money without verifying that he had an account with that amount of money in it. But I believe that even if he had done that and the bank later asked for their money back, he would be criminally liable if he actively took steps to avoid returning the money …maybe a lawyer could weigh in on this. The reason this guy pissed me off, and it hasn’t played much of a part in the discussion…is that he never paid as much as one dime toward the mortgage. Not even in the month after he took the loan, when I am assuming he had 150K or so kicking around that the walked away with at closing. ---
**Author:** ![accidentalyuppie](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@accidentalyuppie](https://boards.straightdope.com/u/accidentalyuppie)\ **Post date:** [March 3, 2009, 2:10pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/23 "2009-03-03T14:10:51Z")
> [@Kyla](#): > > Stupid salesman: It’s okay to say you make $13k a month, don’t worry! > Stupid buyer: Really? > SS: Yup! > SB: Awesome! I’m gonna have a big house! > SS: Awesome! I’m gonna have a big bonus! Stupid #1 -----It’s Ok to park outside the bank and wait for me, really…I’m going to run out with a big bag and jump in, just drive off really fast as soon as I get in. You’ll make $50,000 for 10 minutes work Stupid #2 --------- Really, it’s OK if I do this, I won’t get in trouble? Stupid #1---------- Sure, it’s fine…everybody does it. Stupid #2-------------Oh, wow, I’ve been on this earth for many years and I never realized money was so easy to get…and you say this is aboveboard? Stupid #1---------Sure, let’s go. Ignorance of the law is no excuse ---
**Author:** ![Solfy](https://avatars.discourse-cdn.com/v4/letter/s/848f3c/32.png) [@Solfy](https://boards.straightdope.com/u/Solfy)\ **Post date:** [March 3, 2009, 2:23pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/24 "2009-03-03T14:23:14Z")
When I bought my house not so long ago (but before the mortgage debacle hit the fan) we needed to work a bridge loan. One of our options was a “Stated Income” mortgage. The nice man from the bank explained it thusly: A stated income mortgage does not require any documentation to verify income - they’re handy for people who are self employed or who have sporadic income which makes documentation hard to come by. It is based on what you state your income to be. This is fine as long as you pay the mortgage. If you default on the mortgage, the federal government is going to investigate you, and if they find out you lied about your income, then you’re in big trouble. At no point did he say that the government would ask the bank why they were allowing such mortgages to happen. He made it clear that the onus was on the borrower. For the record, we’ve got a standard, conventional, well-documented plain vanilla mortgage, but the fact that such options exist(ed) kind of blew my mind. ---
**Author:** ![beowulff](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/beowulff/32/542_2.png) [@beowulff](https://boards.straightdope.com/u/beowulff)\ **Post date:** [March 3, 2009, 2:26pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/25 "2009-03-03T14:26:27Z")
> [@MOIDALIZE](#): > > An element of fraud is justifiable reliance on the false statement by the victim. If a lender, in the business of making very large mortgage loans, can’t even be bothered to take the necessary steps to verify the applicant’s income, how can they expect to complain when it turns out the representation wasn’t true? Besides that, if you go by what it says in the OP’s link it doesn’t seem like the borrower unilaterally decided to misstate his income; it seems the broker helped him along. > > **Kyla’s** post highlights the reality of so many of these garbage transactions. Neither side knows what they’re doing, and both are trying to get ahead. Are we gonna imprison the lenders who should have known better? This is so fucking moronic. So, I go to ebay, and I see that someone is advertising flat screen TVs for $100. If I buy one from this guy, and lose my money, it’s somehow **MY** fault that I got suckered? Do you really mean to say that the the party who gets conned is the one in the wrong? That it’s OK (and perfectly legal) to try to con anyone at any time? What a maroon. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [March 3, 2009, 2:39pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/26 "2009-03-03T14:39:32Z")
Here is what it says at the bottom of the mortgage application form: > [@](#): > > Each of the undersigned specifically represents to Lender and to Lender’s actual or potential agents, brokers, processors, attorneys, insurers, servicers, successors and assigns and agrees and acknowledges that: (1) the information provided in this application is true and correct as of the date set forth opposite my signature and that any intentional or negligent misrepresentation of this information contained in this application may result in civil liability, including monetary damages, to any person who may suffer any loss due to reliance upon any misrepresentation that I have made on this application, and/or in criminal penalties including, but not limited to, fine or imprisonment or both under the provisions of Title 18, United States Code, Sec. 1001, et seq.; > [@](#): > > I/We fully understand that it is a Federal crime punishable by fine or imprisonment, or both, to knowingly make any false statements concerning any of the above facts as applicable under the provisions of Title 18, United States Code, Section 1001, et seq. [https://www.efanniemae.com/sf/formsdocs/forms/pdf/sellingtrans/1003i.pdf](https://www.efanniemae.com/sf/formsdocs/forms/pdf/sellingtrans/1003i.pdf) ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [March 3, 2009, 2:48pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/27 "2009-03-03T14:48:14Z")
> [@beowulff](#): > > So, I go to ebay, and I see that someone is advertising flat screen TVs for $100. > If I buy one from this guy, and lose my money, it’s somehow **MY** fault that I got suckered? Of course it’s your fault. Are you actually suggesting that the “victim” of this obvious scheme holds no fault? You’re not 5 years old, you actually have to be a little bit responsible with your money. Look at the situation in the article. A multi billion dollar mortgage company got defrauded by some out of work schlub who engineered the diabolical plan of claiming he made $150,000/yr when he actually made $7,500. The mortgage company, who is supposedly in the business of evaluating borrowers and properties, didn’t think that it might be useful to verify the guy’s income before cutting him a check for $347,000. You know what this business model is? I call it the “guaranteed foreclosure” model. The bank makes the loan under the assumption that they’ll get all of their money back in a foreclosure, so who cares if the guy can afford the loan? They’ll just kick the family out to the street, sell the house, and move on to the next horrid loan and the next family who needs to find a new home. It’s a bullshit business model and both sides of these stupid deals are getting it in the ass these days, and I can’t say I feel bad for either of them. ---
**Author:** ![beowulff](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/beowulff/32/542_2.png) [@beowulff](https://boards.straightdope.com/u/beowulff)\ **Post date:** [March 3, 2009, 2:58pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/28 "2009-03-03T14:58:06Z")
> [@Cheesesteak](#): > > Of course it’s your fault. Are you actually suggesting that the “victim” of this obvious scheme holds no fault? You’re not 5 years old, you actually have to be a little bit responsible with your money. > > Look at the situation in the article. A multi billion dollar mortgage company got defrauded by some out of work schlub who engineered the diabolical plan of claiming he made $150,000/yr when he actually made $7,500. The mortgage company, who is supposedly in the business of evaluating borrowers and properties, didn’t think that it might be useful to verify the guy’s income before cutting him a check for $347,000. > > You know what this business model is? I call it the “guaranteed foreclosure” model. The bank makes the loan under the assumption that they’ll get all of their money back in a foreclosure, so who cares if the guy can afford the loan? They’ll just kick the family out to the street, sell the house, and move on to the next horrid loan and the next family who needs to find a new home. It’s a bullshit business model and both sides of these stupid deals are getting it in the ass these days, and I can’t say I feel bad for either of them. OK, fine, it’s my “fault.” Now, who is breaking the law? ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [March 3, 2009, 3:01pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/29 "2009-03-03T15:01:58Z")
> [@beowulff](#): > > OK, fine, it’s my “fault.” > Now, who is breaking the law? Both might be. It’s illegal to make a false statement on form 1003. See my previous post. Encouraging or assisting a borrower to make a false statement on form 1003, could also be criminally liable. > [@](#): > > (a) Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal. > (b) Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal. [18 U.S. Code § 2 - Principals | U.S. Code | US Law | LII / Legal Information Institute](http://www.law.cornell.edu/uscode/18/usc_sec_18_00000002----000-.html) ---
**Author:** ![MOIDALIZE](https://avatars.discourse-cdn.com/v4/letter/m/e274bd/32.png) [@MOIDALIZE](https://boards.straightdope.com/u/MOIDALIZE)\ **Post date:** [March 3, 2009, 3:36pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/30 "2009-03-03T15:36:16Z")
Title 18, § 1011: > [@](#): > > Whoever, being a mortgagee, knowingly makes any false statement in any paper, proposal, or letter, relating to the sale of any mortgage, to any Federal land bank; or > Whoever, being an appraiser, willfully over-values any land securing such mortgage— > Shall be fined under this title or imprisoned not more than one year, or both. Go after the lenders! (fat chance of that happening) ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [March 3, 2009, 3:40pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/31 "2009-03-03T15:40:59Z")
I’ve seen lots of cases like this, actually. When I find that a loan officer or mortgage broker was involved, I turn them all in to the FBI. The FBI, so far, has not prosecuted individual fraud cases like this. I have also cooperated with the FBI when they are investigating mortgage brokers who have falsified documents. ---
**Author:** ![MOIDALIZE](https://avatars.discourse-cdn.com/v4/letter/m/e274bd/32.png) [@MOIDALIZE](https://boards.straightdope.com/u/MOIDALIZE)\ **Post date:** [March 3, 2009, 3:46pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/32 "2009-03-03T15:46:34Z")
The Feds should go after them. They took advantage of the sheer volume of these loans being processed and the lack of oversight to push their garbage loans up the ladder and walked away with the profit. Of course, I doubt they’d want to expend too much energy going after these people for what appears to be a misdemeanor. ---
**Author:** ![wring](https://avatars.discourse-cdn.com/v4/letter/w/838e76/32.png) [@wring](https://boards.straightdope.com/u/wring)\ **Post date:** [March 3, 2009, 3:47pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/33 "2009-03-03T15:47:34Z")
> [@MOIDALIZE](#): > > No, he did not commit fraud if the lender couldn’t justifiably rely on the income he listed. Happy? If I write you a check off a closed account, yes, you could in fact ‘catch’ me in the act on the spot by checking with the bank (and if the check was large enough it would be a prudent move IMHO), **howver,** I’ve still committed a crime. Period. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [March 3, 2009, 3:50pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/34 "2009-03-03T15:50:23Z")
Putting aside the question of whether he lied about his income or whther the lender should have relied on his statement, the key point is this sentence, “They clearly stated his first mortgage payment would be $2,700 dollars [sic] and he knew he couldn’t afford it.” Even if you accept his dumbass argument that he didn’t read anything, surely he read enough to understand that he was committing to paying back almost three thousand dollars a month. The article says that the wife is a schoolteacher and he was a Marine, so supposedly they’re not illiterate. ---
**Author:** ![MOIDALIZE](https://avatars.discourse-cdn.com/v4/letter/m/e274bd/32.png) [@MOIDALIZE](https://boards.straightdope.com/u/MOIDALIZE)\ **Post date:** [March 3, 2009, 3:58pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/35 "2009-03-03T15:58:49Z")
> [@wring](#): > > If I write you a check off a closed account, yes, you could in fact ‘catch’ me in the act on the spot by checking with the bank (and if the check was large enough it would be a prudent move IMHO), **howver,** I’ve still committed a crime. Period. If I’m in the business of accepting checks from people, then I’d better take measures to ensure (as much as possible) that I’m not taking bad checks. Banks do this by putting holds on deposits. You can’t even write checks at the grocery store nowadays without filling out a form with information they can use to go after you if you bounce a check. Check fraud is a special case. I’m fairly certain every state has a specific check fraud statute to deal with it. But check fraud is not the same as common law fraud. It’s generally a less serious offense. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [March 3, 2009, 4:06pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/36 "2009-03-03T16:06:01Z")
> [@MOIDALIZE](#): > > But check fraud is not the same as common law fraud. It’s generally a less serious offense. A few states have common law crimes. But most also have a law of attempt–typically failure to complete the crime does not make it go away. We recently discussed the law of attempt in the threads about “To Catch a Predator” and online sting operations. Civil common law fraud is different because in that case the plaintiff needs to prove damages, and those must be based on reliance. ---
**Author:** ![Una\_Persson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/una_persson/32/346_2.png) [@Una\_Persson](https://boards.straightdope.com/u/Una_Persson)\ **Post date:** [March 3, 2009, 5:54pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/37 "2009-03-03T17:54:29Z")
> [@](#): > > I/We fully understand that it is a Federal crime punishable by fine or imprisonment, or both, to knowingly make any false statements concerning any of the above facts as applicable under the provisions of Title 18, United States Code, Section 1001, et seq. So the answer is exactly what I suspected, “yes, the guy in the OP did break Federal law.” So now the next question is, how is that defensible? Which laws can I break if I want to? Is there a list? ---
**Author:** ![wring](https://avatars.discourse-cdn.com/v4/letter/w/838e76/32.png) [@wring](https://boards.straightdope.com/u/wring)\ **Post date:** [March 3, 2009, 6:06pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/38 "2009-03-03T18:06:33Z")
> [@MOIDALIZE](#): > > Check fraud is a special case. I’m fairly certain every state has a specific check fraud statute to deal with it. But check fraud is not the same as common law fraud. It’s generally a less serious offense. I work w/criminals by profession, and the penalty for bad checks in my jurisdiction is 3 -14 years in prison. So, yea, it’s ‘less serious’ than, say murder, but it’s still a criminal act. Besides - you seem to be blaming the bank for not catching him at his fraudulent act. (yea, they’re idiots, but all the same, we don’t disallow criminal complaints 'cause the victim was an idiot). ---
**Author:** ![simster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/simster/32/1047_2.png) [@simster](https://boards.straightdope.com/u/simster)\ **Post date:** [March 3, 2009, 6:10pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/39 "2009-03-03T18:10:20Z")
> [@Una\_Persson](#): > > So the answer is exactly what I suspected, “yes, the guy in the OP did break Federal law.” So now the next question is, how is that defensible? Which laws can I break if I want to? Is there a list? He broke the law in signing the contract(s), the recourse, 99% of the time in these is the bank saying no to the loan, and/or going after the monies that have been given to the borrower… IOW, civil penalties. That the lender had the opportunity to review the loan prior to writing the check puts at least some burden of responsibility on them as well. Had the lender done the proper steps at the beginning, the monetary damages would have been negligable, and I doubt the ‘law’ would have ever been involved. What the case illustrates is the corruption in the marketplace that lead to the current debacle. ---
**Author:** ![Una\_Persson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/una_persson/32/346_2.png) [@Una\_Persson](https://boards.straightdope.com/u/Una_Persson)\ **Post date:** [March 3, 2009, 6:35pm UTC](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081/40 "2009-03-03T18:35:04Z")
> [@simster](#): > > He broke the law in signing the contract(s), the recourse, 99% of the time in these is the bank saying no to the loan, and/or going after the monies that have been given to the borrower… IOW, civil penalties. The criminal recourse which is available was previously posted by **Gfactor** and re-posted by me. “ **punishable by fine or imprisonment, or both.** ” > [@](#): > > That the lender had the opportunity to review the loan prior to writing the check puts at least some burden of responsibility on them as well. Does the law say that? It doesn’t seem to to me. If so, can you cite that specifically in reference to what we’re talking about here? Or is that just your opinion? And seriously, how can the blatant fraud of this guy be defended? I know it’s the SDMB where all big corporations are “teh evul”, but _come on!_ This guy didn’t just fuck the bank, he fucked the people who didn’t get their loan because the bank had to tighten up lending to cover its losses. He fucked the taxpayers who will bankroll the bailout. He fucked people like me who bought a small house they didn’t want so they could live within their means. He blames it all on “a swirl of paperwork” that made his poor wittle head spin. If his defense was that he’s mentally incompetent and should not be allowed to enter into contracts like a normal, functioning adult, I could at least respect that. [Previous page](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081.md?page=1) [Next page](https://boards.straightdope.com/t/this-former-marine-should-be-jailed-for-mortgage-fraud/488081.md?page=3)