I Was Asked to Commit Mortgage Fraud

Posted on Jul 03, 2026 in

I Was Asked to Commit Mortgage Fraud (Here’s What Happened)

Well… I guess it finally happened.I was asked to participate in mortgage fraud.And honestly, I didn’t quite know how to react.I’ve heard about this kind of thing happening before. Other agents have talked about it. I’ve even covered related topics on this channel—things like cash-back schemes.But this?This was different.This was direct.And it came from someone I would have otherwise considered a colleague.So today, I’m going to walk you through exactly what happened, because people need to understand that this is happening in the market right now—and how to spot it.

The Situation

I had a listing.

It had been on the market for a few months
It was well-priced
We had consistent showings (3–4 per week)
We even had an offer early on that fell apart

Eventually, we were preparing to take the property off the market.Then suddenly…👉 An offer came in.

The First Red Flag

The offer was:

Non-competing
Over asking price (by ~$10,000–$15,000)

Now, normally?That sounds great.But in this market?👉 That made absolutely no senseAfter months on the market, buyers don’t just show up and overpay.So naturally, I looked deeper.

The Second Red Flag: The “Fee Agreement”

Attached to the offer was something called a fee agreement.Now, fee agreements can be legitimate.They’re typically used in situations like:

For-sale-by-owner transactions
When a buyer’s agent isn’t being paid through MLS

But this wasn’t that.This property was already listed on MLS.👉 The commission was already covered.So why the extra fee?

The Numbers Didn’t Add Up

Typical buyer agent commission on this deal:👉 ~$7,000–$9,000Let’s call it:👉 $8,000But the fee agreement?👉 $30,000And that’s on top of the existing commission.So now the agent isn’t making $8,000…👉 They’re making $38,000That’s nearly 5X normal compensation

The Explanation (That Made No Sense)

When I questioned the agent, here’s what they told me:

They had agreed to a referral fee
That referral fee was… $30,000

Now, let’s break that down.Typical referral fee in real estate:👉 ~25%So on an $8,000 commission:👉 ~$2,000But this?👉 $30,000That’s not 25%.👉 That’s nearly 400% of the commission

So What’s Really Going On?

Let’s connect the dots.The offer:

Over asking by ~$15,000
Includes a $30,000 fee agreement
Fee is not referenced in the contract (huge red flag)

And here’s the kicker:👉 That $30,000 was very close to the minimum down payment required

The Likely Scheme

This looks extremely similar to the old cash-back mortgage fraud setup.Here’s how that worked:

Buyer “pays” full price
Receives cash back after closing
Uses that as their down payment
Bank thinks buyer put money down… but they didn’t

👉 That’s mortgage fraud

The Modern Version (What This Looks Like)

Instead of cash back:

Inflate the commission via a fake fee agreement
Pay that money out as a “referral fee”
Funnel funds back to the buyer (or facilitator)
Use it to fund the down payment

👉 Same outcome
👉 Just disguised differently

Why This Is Dangerous

Some people might think:“Who cares? The bank still gets paid.”Wrong.Here’s who actually gets hurt:

1. The Bank

They’re lending under false assumptions

2. Future Buyers

Artificially inflated sale prices distort market value

3. The Industry

Trust gets eroded

4. The Buyer (Eventually)

If discovered later, consequences can be severe

The Worst Part

This is where it gets uncomfortable.Imagine:

A seller is struggling
Facing foreclosure
Desperate to sell

And this offer shows up.👉 It would be VERY tempting to acceptThat’s how this spreads.

What I Did

I told my client exactly what this was:👉 Likely mortgage fraudAnd we declined the offer.No hesitation.

Here’s What Makes This Even More Real

After this happened, I spoke to another agent.They told me:👉 They had seen this exact same scenario three times in five weeksSame pattern.Same type of offer.Same agent involved.

Final Thoughts

I want to be clear:If I’m wrong?👉 I will come back and correct this publiclyBut I have yet to hear a legitimate explanation that makes sense.So I’ll say this plainly:👉 If you see a large, unexplained fee agreement attached to an offer…
👉 And it doesn’t make logical sense…You need to question it.

Watch For This

Be cautious if:

The fee is far above normal commission
It’s not referenced in the contract
It’s justified by vague “referral agreements”
It conveniently matches down payment requirements

👉 That’s not coincidence

Bottom Line

This is happening.And most people won’t talk about it.But I will.Because the only way this stops…👉 Is if more people understand it.

Written by:
Steve Karrasch PREC
Karrasch Real Properties Team
Macdonald Realty

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