Legal Question in Real Estate Law in California

Re: Real Estate Loan

You do not say whether you are licensed as an agent or a broker or even licensed in the State of California. Either way, you should know that false or misleading statements in a loan application submitted to a state or federal lender is a felony under both state and federal law and is also punishable civilly. It is irrelevant whether you "helped" the borrower or not or whether the loan was better for them; rather, you owed a duty of honesty to the lender too, and you likely violated or aided and abetted a fraud on the lender. FYI, a borrower should NEVER receive cash back out of escrow (and yes, I know it has been done all the time lately but this is because there are too many uneducated or dishonest agents who are putting these types of deals together!)unless this is known by the ultimate lender (NOT the loan brokerage, whose money is rarely what is funding the loan)) and AGREED to by them in writing! It looks like your borrowers are crooks and the question is whether you knew this at the time.

Re: Real Estate Loan

Well, you are probably licensed by the Department of Real Estate, and as part of your training you were no doubt exposed to meterial about a real estate loan broker's responsibilities both to the borrower and the lender. The DRE also makes available its rules and guidelines.

Indeed, the loan you put your clients in sounds better for them....but you also have to consider the reasonable expectations of the lender. It seems that this loan is not "better" for the lender.

If the lender reports you, and that seems pretty likely, the issues that will come up in an investigation will be whether you exercised professional responsibility and screened the application and supporting documents for probable veracity, whether you brushed it off too lightly in the interest of creating volume and doing deals without much regard for the lender's expectations, or whether you actively participated in creating a deceptive and fraudulent application.

At this point you should take a careful and realistic look at what you can say to a DRE investigator and what your defenses are against charges that might be leveled against you. The fatc that you got the borrower a good loan will not overcome the possiblinity that it is a bad loan from the lender's viewpoint and the borrowers weren't really qualified.