In Get Educated, Part One, we discussed how to verify someone’s experience. We also explained that you should find out what your loan options are before your divorce is final, because the terms set out in your final judgment of divorce can either foster your goal, or prevent it. And your lawyer is unlikely to know the terms you want.
Get educated. What else does that consist of? If you’re contemplating divorce, if you own a home that you and your spouse have agreed to sell, if you and your spouse wish to purchase new homes with one of you (the one with the fabulous credit) obligated on both mortgages, then you must find an individual with the right qualifications to advise you on the best way to accomplish that goal. Such a qualified lending professional doesn’t necessarily have a finance education, but should have the right experiential background.
If not, you could be looking at prison.
One day, during a collaborative team meeting concerning the division of a couple’s assets and liabilities, the husband, Howard, explained the clients’ plan to sell their two-million-dollar home and to each purchase a $600,000 property to live in separately moving forward. (Although Howard was a doctor, his wife, Betsy, had been a stay-at-home mother for the thirty-year marriage, so Howard would have to be on Betsy’s mortgage, in addition to his own, in order for Betsy to qualify for a mortgage loan.)
Howard explained that the couple had already consulted with a mortgage broker, Dean, who was married to Betsy’s hairdresser. Dean had advised them that Howard should consult with two separate lenders (one for each of the two separate properties) and should inform each lender that the home in question would be his primary residence. Dean’s intent was to ensure that Howard received the lower rates attributable to loans on a primary home. It would also ensure that Howard was required to put down less cash, as lower down payments are required for loans on primary residences than for investment properties. Additionally, it would save Betsy interest in the neighborhood of $25,000 over the life of the thirty-year note.
Luckily, when the couple selected their realtor, the realtor referred them to a qualified lending professional. Frank believed in educating his clients. At Howard’s and Betsy’s request, Frank attended the next full team meeting.
Howard explained the couple’s plan and then reiterated Dean’s advice. Frank’s reaction was immediate and slightly explosive. “Wait a minute.” Frank expostulated, looking thunderstruck. “So this broker told you to list each residence as your primary residence?”
“Yes,” Howard replied.
“Well, both homes can’t be your primary residence, right?” demanded Frank.
Howard looked a little abashed. “That’s correct. Only the one I’m living in will be my primary residence.” Howard answered.
“Well, then following this broker’s advice would result in you committing federal mortgage fraud.” Frank gravely looked the husband directly in the eyes.
Betsy and Howard both gasped and looked equally mortified.
After a prolonged pause, Howard took a deep breath. “Thank you for telling us this. I don’t want to commit federal mortgage fraud. I didn’t understand the consequences of what Dean was suggesting. I just thought it was a commonly accepted method of obtaining better mortgage rates.” He paused, before continuing. “But I have to admit that I wondered. It just didn’t sound right.”
Betsy jumped in. “Howard, I would never have asked you to commit fraud. Let’s just go to one lender and be upfront with him. Even if it’s not as good a deal as what Dean suggested, at least it will be honest and we can both still purchase new homes.” She turned to Frank. “Can we consult with you?”
Watching Betsy, Howard nodded his agreement. “Yes, let’s do that.” He also addressed Frank. “I just want the best honest and legal deal possible, Frank. I’m so glad you came today and clued us in. I can’t imagine what Dean was thinking!”
Betsy smiled. “Thank you so much. You prevented us from making a huge mistake.”
Frank grinned. “I’m glad I could be here for you both. Committing a federal crime has serious consequences.”
Hiring a good criminal defense lawyer is expensive, not to mention stressful. Most people don’t have enough savings to afford hiring such a lawyer. It is simpler and much less stressful to avoid going to jail by getting educated before you ignorantly commit a crime. Remember, “ignorance of the law” is not a defense.
Get educated. Find an advisor who will educate you in how to help yourself rather than someone who will just tell you what to do. Someone who is just telling you what to do may not be as ethical as you are. And, if you commit fraud, the person giving you the advice is not the one going to jail; you are.
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About this week’s authors: Joryn Jenkins and Allen Weinzapfel.
Joryn, attorney and Open Palm Founder, began her own firm here in Tampa after a 14-
year career in law while also serving as a full-time professor in law at Stetson University. She is a recipient of the prestigious A. Sherman Christensen award, an honor bestowed upon those who have provided exceptional leadership to The American Inns of Court Movement. For more information on Joryn’s professional experience, take a look at her resume.
Co-Authored by All Weinzapfel.
Allen Weinzapfel, the Purchase Lending Manager at CBC National Bank, is a dedicated and accomplished home financing specialist. Allen has over seven years of experience in home lending, six of which have been spent dedicated to family issues. Using a proactive and educational approach to achieving specific home financing goals, Allen has helped numerous clients transition through divorce and avoid financial ruin. Contact Allen at firstname.lastname@example.org.