Many agents are aware that if the purchase contract does not specify a termite report, the lender will not require it.
Many agents also know that Section 1 work on a standard termite report is a loan-killer. No lender is going to fund a loan while termites are in the process of eating the structure. Therefore, the lender will require section 1 work to be completed prior to funding the loan.
But if there's no termite clearance required in the purchase contract, the lender won't ask.
Therefore, many agents are barefacedly committing fraud because they know there is termite work to be done, work that their clients don't want to do.
So what happens when the termites keep eating? What happens when the buyer discovers that they need this work, only there is no equity, often due to the fact that the work needs doing? Do you think they might be at risk for foreclosure?
Who do you think the lender is going to look at first for concealing this?
I work as an agent as well as loan officer, and I just had a listing agent propose this fraud completely cold in an email, as if there was absolutely nothing wrong with it.
Watch yourself. Make sure your regular agents understand that this is fraud, and that in the case of a "successful" transaction where this does get funded, both of your licenses are going to be forfeit if the new lender wants to make a complaint, as well as you quite likely having to redeem the loan.
Lots of people only understand the immediate commission check, not the professional consequences that can flow from just one of these transactions going bad. Not to mention what happens to the clients, who lost their home, whatever money they had put into it, and whatever portion of their life went into saving that money and recovering from such a loss.
Comments