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Not trying to make a political point here.
I spent years as a mortgage banker at Quicken Loans (now Rocket Mortgage), the number one mortgage lender in the country, before I ever went to law school. So when I see stories like this, I look at them a little differently.
Here’s the deal. How you classify a property as a primary, secondary, or investment home changes everything about the loan. The down payment, the interest rate, the underwriting, all of it.
Primary or secondary homes can get by with as little as 3 to 10 percent down.
Investment properties usually require 25 percent or more.
So if you’re a brand new real estate investor with limited cash, there’s a big incentive to call something a “second home” instead of an “investment property.”
But that’s why lenders make you sign a Second Home Rider, a separate document where you specifically promise you’ll use it as a second residence, not rent it out.
You also assert like NINE times in the application process it will be owner occupied…
Could this kind of thing ever be an honest mistake? I doubt it.
The facts, at least as reported, look pretty bad.
You buy a house, say it’s a second home, immediately rent it out, tell your insurer it’s owner-occupied, and then report rental income on your taxes.
That’s not a misunderstanding. That’s a pattern.
By the way guys, taking home owners insurance under the misrepresentation that it’s a primary for better rates is a great way to have a claim denied when your house burns down.
Very shortsighted mistake that many make...
Would a bank ever catch this on their own? Probably not.
Banks rarely dig that deep unless there’s a default or an insurance claim.
They just don’t have the infrastructure or frankly the desire to chase it down.
So yes, it’s definitely selective prosecution.
The amount of money at issue is small, and most people would never be charged for something like this.
But still, if the facts are accurate, it’s just a series of really bad moves.
And the wild part is that she’s a lawyer.
She’s the Attorney General of New York.
She’s prosecuted the former president for similar financial misrepresentations.
You’d think someone with that background would fully understand what those documents say and what it means to misstate intent on a loan.
It’s going to be a tough case for her to defend, unless she’s able to present additional information that clarifies the situation.
It’s possible…
In the meantime, there are lots of financial and life lessons in this story for all of us. |
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