Court backs penalty for dummy-down sales

Monday, Aug. 20, 2001 | 9:06 a.m.

CARSON CITY -- The Nevada Supreme Court has ruled the state may revoke the license of a Las Vegas mobile home dealer who submitted false information to lending institutions in the late 1990s.

The ruling was irrelevant to Robert Swick and Silver State Mobile Homes Inc., however. Swick's business license was yanked a month ago because he was in bankruptcy and had no place of business, Renee Diamond, administrator of the state Manufactured Housing Division, said Friday.

The decision, though, will help in regulating the so-called "dummy down" practice used by some mobile home dealers, Diamond said.

A complaint was filed against Swick and his business in 1997, accusing them of misrepresenting the cash down payment on credit applications to banks.

A prospective customer may have only put $500 cash down, Diamond said, but Swick listed the down payment as $5,000 to the banks or financial institution to qualify the customer for the loan. Swick said he was applying his dealer rebate to the cash down.

Diamond said Swick would inflate the down payment to enhance the credit worthiness of the prospective buyer. He would then make buyers sign a promissory note that they owed Swick the amount of the dealer rebate.

The practice had been used "all over the country," she said, adding it is an "illegal way of selling these homes." The ruling, she said, would help stop other companies using the technique.

Two of the three financial institutions involved -- one of them owned by Swick -- knew the credit applications were false.

A state hearing officer ruled there was no cause for state disciplinary action in the two cases where the institutions knew. The state, the hearing officer said, must show the credit applications contained fraudulent information that would lead a lender to finance a home sale that it would not otherwise have financed.

In the third case, the hearing officer found there were four violations and Swick was fined $500 on each violation.