The borrowers, Owen Big and Penny Less, needed to consolidate some of their debt. Penny failed to pay her income taxes and Owen defaulted on a credit card. The IRS had levied their property and a creditor had a judgment, which was also attached.
The Release of Levy and the judgment were both subordinate to a first and second mortgage. They needed every last cent of the equity in their home to consolidate these outstanding debts. Unfortunately, they did not have enough equity in their home.
They enlisted the assistance of Faked Out Tax Services, LLC to assist in negotiating a release of the IRS lien to qualify for the consolidation loan. The IRS has procedures in place which provide for a partial release or full release of a taxpayer’s property, IF that taxpayer is working with them to put a payment plan in place and making those payments timely.
Sometimes the IRS will accept a partial payment in exchange for the release. Faked Out Tax Services, LLC was retained to assist with this process.
The loan officer continued to work with their underwriting department to approve the loan — with the condition the IRS lien would be released — so the lender’s new loan would be secured by a deed of trust in first lien position against the borrower’s home.
The borrower’s interest rate lock was set to expire in seven days. The loan officer ordered the loan documents and was coordinating with the borrowers and escrow officer to have them signed. The escrow officer informed her she was still waiting for the IRS payoff demand.
The loan officer reached out to the case officer at Faked Out Tax Services, LLC who indicated the revenue officer at the IRS agreed to release the lien; however it had not yet been provided or generated.
The case officer asked if there was anything they could provide to help the borrower close. The loan officer asked her to provide something from the revenue officer indicating the release was being processed. The case worker emailed Form 668-D, Release of Levy/Release of Property from Levy.
Janice Metz, from Fidelity’s Albuquerque, New Mexico operation, was the escrow officer assigned to the transaction. She took one look at the Release of Levy and knew it was a fake.
The fonts on the Release of Levy were different and some of the letters were different sizes. It appeared to be cut and pasted. The release named Penny and Owen as the taxpayers, yet the recorded Levy was in Penny’s name only.
Janice did not stop there. She verified her suspicions by calling the IRS agent. The voice mail indicated the number was for a different agent.
Janice instructed the loan officer to notify the borrowers they needed to contact the IRS directly and authorize them to send the Release direct to Fidelity National Title. That is how the borrowers found out what Faked Out Tax Services, LLC had done.
Less hired them to negotiate on her behalf. She had paid them nearly $20,000 for their services. In the end, the borrowers’ lock expired, the file canceled and the borrowers still owed the IRS $99,900. Fortunately, the IRS is now investigating Faked Out Tax Service, LLC.
Janice Metz protected the Company, the lender and borrower from being victims of a forgery by trusting her instincts and verifying they were correct. One simple phone call and she knew. She is being rewarded with $1,500 and a letter from the Company. Thank you, Janice!
Article provided by contributing author:
Diana Hoffman, Corporate Escrow Administrator
Fidelity National Title Group
National Escrow Administration
Article originally appeared here: https://fraudinsights.fnf.com/vol18iss08/article1.htm