Thursday, September 16, 2010

An explanation for committing mortgage fraud by City of Miami Commissioner Marc Sarnoff, Freudian slip or a carefully planted comment?

We've discussed embattled City of Miami Commissioner Marc Sarnoff and the allegations of mortgage fraud against him recently.  The most serious of the allegations against him are regarding which of his three houses in Coconut Grove are his "primary residence", as we discussed last Tuesday, Mr. Sarnoff has indicated in the mortgages for his three homes that they are all his primary residences and therefore able to enjoy a lower interest rate rather than the rate he would have to pay if he indicated to the lenders that at least two of the home were his second or investment homes.  While this is not a big deal to some, remember this is precisely what the people charged in federal Plantation Police officers indictment are being accused of.

So why would someone lie about their primary residence to their lender?  A fantastic local blog that covers the misdeeds of those in Miami politics Investigation Miami while covering a City of Miami budget meeting came across a most interesting comment from Commissioner Sarnoff last night while discussing city employee pensions...
"Allegations of possible mortgage fraud published here must have been weighing on Marc DAVID Sarnoff when he blurted out an unbelievable statement very early in the day (so he can't blame being worn out when he said it). When discussing changes to the city's pension ordinance Sarnoff says something to the effect 'Reading an ordinance is like reading your mortgage. I don't know anyone who's ever read their mortgage!' Now that is one heck of a statement from an attorney - he doesn't read a contract before he signs it? Or was he saying he doesn't read the ordinances before he votes on them?"
HUH?!  No one reads their mortgage?  I'll buy that.  So Mr. Sarnoff didn't acknowledge the home that he was financing here as a second home because he didn't read the mortgage...

Ok, even though the page has got his initials, maybe he really didn't read it.  Perhaps then on his next mortgage he did read the document he was executing?

Ok, you don't read the document, you forget to check off the part about it being a second home, maybe next time?

Nope, three mortgages, three instance where Mr. Sarnoff didn't read this important legal document, three instances where he forgot check off the part about the home being a "second home", perhaps on the forth try...

Isn't that interesting?  In this fourth mortgage someone checked off the 1 to 4 family rider box!  Now, although people may not read the legal documents that their signing, at the very least my experience with real estate and mortgages reminds me that at closing the closing agent or attorney conducting the closing goes through every page of each document and explains what needs to be checked off  and or signed or initialed as well as explains the pertinent conditions of the mortgage.  Food for thought when considering the "nobody reads their mortgage" defense for committing mortgage fraud.

Yesterday we got the "I didn't know what was going on" defense and today we have a novel new defense "who reads their mortgages", both pretty pathetic excuses from two attorneys.  You're left to wonder though, was this "who reads their mortgages" statement from Mr. Commissioner Sarnoff Freudian slip or a carefully planted comment that foreshadows his defense of the mortgage fraud allegations against him?


  1. People are not good at reading and signing things at the same time. The reason why they want you to initial every page is so that you will not read them. The reason why several of the things that you sign are statements that you have received and read other things is to make it more likely that you will not read any of it. Mortgage contracts should be capped at 2 pages.

  2. That's a fine explanation for a lay person but not for an attorney who was receiving the benefit of a lower interest rate by lying about his primary residence to a lender.

  3. I'm a layperson. I read my mortgage.