“The argument that this is theft or fraud is kind of silly though.”
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Agreed.
And unless the borrower signs a contract with the lender agreeing to disclose all offers, the borrower can present whatever offers they see fit. In fact, the borrower can present only the lowball offer from his brother and say take it or leave it to the lender – then the lender can evaluate whether it makes more sense to take the lowball or foreclose and become a property manager in a declining market.
I simply do not see anything fraudulent here. If the lender doesn’t like the offer, don’t accept it. Have a BPO done and see what the market says. It’s that simple.
Withholding information does not equate to fraud. Does a lender commit fraud if they don’t tell you that they can do the deal with no points instead of 1 point if you agree to the 1 point? Of course not. You don’t like the deal, don’t do the deal.
