What a nightmare!
It occurred to me while sitting in a closing the other day that there have been nightmarish deals over the course of my 21+ years in this business, and some of them are stories that just make you scratch your head in utter amazement as to how these disastrous deals ever made it as far along in the process as they did. There were things that came up during the processing of the loan, challenges that came to light during the closing of the loan that derailed the deal, and things that came to light after a loan closed. Some of these things, had anyone known about them, would have stopped a loan dead in it's tracks and may even have led to someone being arrested and charged with fraud. I have decided to try and recall some of these scenarios as I feel some of them warrant being told and you will find some enjoyment out of hearing some of the things loan officers in the mortgage industry run into from time to time.
Let me start with a quick one that happened in my first or second year in the business; this would have been in '92 or '93, and to a greenhorn, nothing would have been a red flag at all!.
The borrower was a Japanese businessman who still lived part-time in Japan, but had enough business here in the states that he decided to purchase a small residence here. He was spending about 8 months of every year here in Nashville and came to me to buy a place where he and his wife could live that was convenient to his work and would be an investment, thus avoid throwing money away each month on rent. Working with someone who is not a full blown US citizen was a first for me at the time and kept me busy looking up and learning new guidelines about such a loan scenario. This loan took quite some time to get processed due to the distraction about his residency status and what needed to be done to overcome that small fact. When all was said and done, he had a decent sized down payment, his income was determined to be sufficient to do what he was asking to do, and his credit was determined to fit within what we needed to provide a mortgage for him to buy this home. After much effort, time, and frustration on all parties involved, we get to the closing. By that time the borrower had calmed down since we were no longer asking for documentation to verify something that seemed so ridiculous. We are now all at the closing table beginning the signing process. One of the ladies on staff at the closing attorney's office pokes her head into the closing as asks the attorney to please step out so she can discuss something with her quickly. While this is unusual, it was not a cause to be concerned as she didnt seem alarmed when asking him to speak. Small talk with the borrowers wasn't that difficult as they were looking forward to moving in and the wife seemed eager to get going with decorating and setting up shop.
After what seemed to be an hour, the attorney poked his head into the room and was now wanting to speak with me briefly. OK, now I am getting a bit concerned. I politely excused myself and assured them that everything was alright as we were at the closing, so there wasn't anything that could mess the deal up at this point. When I walked into to the attorney's office, there were a couple of people in there and he took his seat at his desk. He asked me what I thought was an idiotic question. "Are you aware of the fact that this man is married?" Of course I answered, they are both in the room trying to close on their home, why? What came next might as well have been the fact that I just won the pub clearing home sweepstakes as I literally had no response at all.
Well, here is the punchline. Yes, in fact this gentleman was married, in fact he had that covered both here and in Japan. To this day I still am not sure how this came to light, but my borrower was trying to close on his home here with his wife while his other wife, yes, that is correct, his other wife in Japan, was not here to sign docs as the spouse. My client was moments away from buying a home here with his US wife but his wife back home had no idea of any of this. Needless to say, when he was presented with the question about his spouse back home, he went into escape mode and played it off as something he wasn't aware he wasn't able to do. Hmm, a wife and home here in the US and another wife and home when he travels back to Japan. Well, let's just say that the deal was shot down right then and there. No close and the last thing I remember as they were storming out of the closing was the attorney trying to explain to this man that not closing on this home under these pretenses was the least of his worries as having more than one wife was, and stil is, illegal.
I never heard another word from that borrower and he never returned any messages when I was told I had to follow up afterward. I think back on that and it seems that it went away too easily. If I was to run into that today, I know for sure that there would be some jail time in it for him. I just don't remember there being anything else that came from this little issue. Oh well, my take away from that was to be sure that spouses are in fact the sole spouses each has and there is no other husband or wife floating out there somewhere!
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