Short Sale Fraud Plagues the Housing Market
In this latest twist on short sale fraud, scammers have found a way to rip off mortgage lenders by tens of thousands of dollars — sometimes in a matter of hours.
Palm Coast, FL – July 15, 2011
NEW YORK (CNNMoney) — Just as the housing market began to collapse near the end of 2007, a real estate agent in Bridgeport, Conn. asked Regions Bank if it would accept a $102,375 bid on a home that was underwater on its mortgage. Under the impression that this was the best offer on the home, Regions agreed to the short sale and released the mortgage it owned on the home.
Later that same day, the new owner — an investment group owned by another real estate agent — resold the home to a buyer who had been lined up before the short sale transaction went through. The final sale price: $132,500, netting the seller a cool $30,000 — a profit that should have gone to Regions.
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Short Sale Fraud
A client called me a few days ago, wanting to make a short sale offer. Their agent told them the listing agent wanted the offer to read "owner of record" as the seller.
The only reason I could think of was that someone was trying to do a short sale flip – which the lender usually specifically states voids the short sale agreement.
I can’t think of any other reason the contract for sale would not state the exact name of the seller.
"owner of record
It does not matter if New Buyer wants to Flip, there is more ways to skin a cat.
Maybe Agent was too lazy to do title serch to find out how title was vested, a lot of owenrs put tile in Living Trust or wife’s name only and etc.
at end still Lender and person who executed note have to agree on Release and other issues related to Short-Sale