Mortgage fraud refers to an intentional misstatement, misrepresentation, and/or omission of information relied upon by an underwriter or lender to fund, purchase, and/or insure a loan secured by real property. A criminal referral has been issued by federal officials to the U.S. Department of Justice questioning whether U.S. Senator Adam Schiff committed mortgage fraud. It appears he has.
Those of us who have either acquired a personal residence or have refinanced a property know how daunting the paperwork is when you buy that property and you place financing on it. There are forms and then there are more forms. One might believe that reviewing the endless stack might be a little easier if one happens to be a graduate of Harvard Law School. It would be ostensibly easier for someone who clerked for a federal judge and prosecuted cases as an Assistant United States Attorney. That same person has held other people to the highest standards, leading one to think he would hold himself to those same high standards.
Washington DC is filled with stories of members of Congress sleeping on a coach in their office or sharing an apartment with one or more fellow members. That is caused by the high cost of maintaining two households: one in DC and one in their district. Mr. Schiff decided on a different path.
Despite just entering his second term in 2003 as a member of Congress he bought a 3,420 square foot home in Potomac, Maryland, with four baths and multiple bedrooms. Mr. Schiff was apparently planning to stay in DC for a long time.
On March 4, 2009, during the height of the mortgage crisis, Schiff refinanced his property at 8204 Windsor View Terrace. The recorded deed of trust on the first page has handwritten words across it: principal residence. It was recording a loan by Quicken Loans. The deed is signed by Schiff and his wife, Eve, who was apparently complicit in this action.
On page 3, there is an additional notation described as Exhibit A. It states, “This is refinance of a $559,695 loan under which is secured by the grantor’s principal residence and that this is their principal place of residence.”
The only reason the Schiffs would have signed this as their principal place of residence is because there are distinct advantages to a loan on a principal residence. Those possible advantages are a lower interest rate and a much smaller down payment.
This begs the question of how this can be. Schiff was a member of Congress from the Burbank-Glendale area of California, and members of Congress must reside in their respective states. Soon afterwards, Schiff then set out to cure that problem.
On June 23, 2009, still at the height of the mortgage crisis, they recorded a deed on a condo at 250 North First Street, Suite 427, in Burbank, CA. The deed states their address is 8204 Windsor Terrace View in Potomac, Maryland. The condo was and still is their residence in California.
This was certainly a cozy family abode. The condo is 650 square feet with one bedroom and one bathroom. Makes for close quarters for a family of four.
This deed of trust was written as their primary residence also. We know that because the deed has the exact same clause as in the deed they signed just four months prior to this.
Clause 6 is labeled Occupancy in bold type. The clause states, “Borrower shall occupy, establish, and use the Property as Borrower’s principal residence within 60 days after the execution of this Security Instrument and shall continue to occupy the Property as Borrower’s principal residence for at least one year after the date of occupancy, unless the Lender otherwise agrees in writing, which consent shall not unreasonably withheld, or unless extenuating circumstances exist which are beyond Borrower’s control.”
The Schiffs had just signed a deed for their Burbank property as they had three months prior on their Potomac property. They told Wells Fargo the same thing they told Quicken Loans – this was the primary residence. They told the people of California their family was living in a one-bedroom, one-bathroom unit in the district he represented when he was actually living in a spacious home in Maryland.
Schiff intentionally misled the people of California that he is a resident of the state. He told Quicken loans he would notify them per Clause 6 if he was no longer using the Potomac home as a principal residence. He did not. The charade continued until he refinanced the home in Maryland in 2020.
It is clear Schiff violated the trust of the people of California and violated federal law regarding mortgages at the height of the market’s near collapse. It will be interesting to see whether he is prosecuted and found guilty of the second charge.
