by Blackwell M. Brogden, Jr.
Deputy Legal Counsel
When I was an Assistant District Attorney, I prosecuted a number of criminals who relied upon what we sometimes referred to as the "some other dude" defense. That is, they blamed someone else for the crime that they had, in fact, committed. Ironically, as an attorney for the Real Estate Commission, I hear that same feeble excuse used by real estate agents accused of loan fraud who say, "But the loan officer said to do it that way."
In the "slow" real estate market that agents now find themselves, it is perhaps especially tempting for them to try to "make deals work" by encouraging purchasers to make false or misleading statements in their sales contracts and loan applications concerning the amount of their earnest money deposits and down payments. The agents then compound the misrepresentation by falsely stating that they are holding these amounts of earnest money and down payments in their trust accounts, or they conceal the fact that they have themselves temporarily "loaned" funds to the purchaser.
Real estate agents should be aware that it is a federal crime for anyone to make a false statement to acquire credit under a loan program which is either federally insured or funded or from a federally related institution. Likewise, although North Carolina does not have a specific statute aimed solely at loan applications, misrepresenting facts in order to obtain credit usually constitutes the criminal offense of "obtaining property by false pretenses." These offenses are felonies which will likely result in imprisonment and even loss of citizenship.
Furthermore, the making of false statements to lenders as well as any other misrepresentation and/or omission of material facts is strictly prohibited under the North Carolina Real Estate License Law and can result in disciplinary action by the Real Estate Commission.
Licensees are reminded to exercise common sense and sound judgment when assisting purchasers in arranging financing for their real estate transactions. Don't put your license or your freedom in jeopardy!
"But the loan officer said to do it that way" is not a valid excuse.