I have a client that filed a false application for a commercial mortgage. Client is making payments timely, but the bank wants client to sign a forebearance agreement whereby they agree to continue to service the loan but my client must make a sworn statement to the bank fraud department whereby client is to explain the fraud.

There is real exposure making a sworn statement because its really a confession. Bank may agree not to prosecute, but there is always the risk that they may.

Client doesnt want to make the statement, but if he doesnt, the bank may foreclose on the loan. Suggestions?

Thanks

Great1 - do not let your client give a confession to the bank. Banks are required under federal law to report any and all fraud. A bank can agree not to prosecute, but the federal government will step in and file charges. So, have the bank foreclose on the loan. Who cares?

I'd tell the bank, we will sign the foreclosure agreement but not make a statement to the bank fraud officer. What's the purpose of making a statement to the bank if not to incriminate your client? Screw that.

Tell your client to refinance and get out of that loan. According to your statement, client made a false application. So, technically, a crime was already committed. Its your job as his attorney to protect your client (not hide information). Have him plead the 5th or not testify.

There is a serious implication for your client. Make sure you don't let him speak. And, make sure your inform him of the dangers of making a sworn statement (which is really a confession).

Samantha..thx for the advice. I think the bank is tryingto build a case against the lender agent that worked for the bank. But you are right, I need to advise my client my to confess or talk to the bank. The problem is that the bank may foreclose on the loan or they may get him investigated because he is not cooperating.

I have a call with the bank today. I will let you know how it goes. Please stay tuned as I might need co-counsel assistance. I'll get your contact info, as this client is willing to pay

Besides, even if they try to prosecute your client later, without his statement, he could likely strike a deal in exchange for any testimony against the mortgage broker. Why give them something for free and hurt yourself, when you will likely be able to get a get out of jail free card later.

I would like to add to the prior posts in this thread and give you my recommendation. I am a former country prosecutor so I can respect the fact that you don't want to put your client in harms way by voluntarily making a confession.

You are aware that banks are under compulsion to report all instances of bank fraud to the US attorneys office.

So, I would beat the bank to the punch. I would setup a meeting with a US attorney and explain the situation and have that US attorney contact the bank, hopefully to tell the bank that there is no criminal investigation on your client.

If you go to the bank first, there could be a fraud referral to the US attorney. If you do nothing your client could still get reported. So, go to the powers that be and resolve this for your client. This is more serious than just losing a loan.

Good luck!

While this might be the right plan of attack, at least get a letter of immunity from the people you talk to, or some sort of deal in advance. The feds are not always your friend. Especially in these situations.