A Florida couple has filed a lawsuit against their real estate agent and mortgage originator for the couple losing earnest money and for fraud. The couple alleges that the agent urged the couple to use a certain originator when buying a house that the agent work with “almost exclusively” with this originator. The couple agreed and they were verbally pre-approved for a $600,000 loan.
After the couple deposited $13,350 of earnest money on a house, the originator explained that the underwriter needed the couple to show that they intended to lease the home for additional income. The couple was allegedly encouraged by the originator to create a false lease with a friend, obtain a check and then “tear it up” after the house was purchased. The couple refused, explaining that they did own two homes, but did not want to lease one. As a result the couple lost the loan approval and the earnest money.
While fraud is not covered under insurance policies, defense costs might be, explains BrokerLiability.com. It is important to not only monitor each real estate agent a firm contracts with to assure upright and proper actions, but also to maintain the insurance necessary to respond to such allegations. Contact us to learn more about how to protect your firm.