California Real Estate Fraud Report

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16
Sep

Short Sale Fraud a Growing Problem in Stanislaus County

Although the federal government recently earmarked $19 million to help stabilize neighborhoods hit hard by foreclosures in Stanislaus, San Joaquin and Merced counties, according to writer Jeff Jardine of the Modesto Bee, it’s like pouring water into a broken bottle, as short sale fraud by dishonest real estate agents is a factor in driving down property values.

Written about extensively, including in this blog, a listing agent for a short sale property submits a low-ball offer on behalf of his buyer-investor or even himself but where his identity is unknown because the offer is made through an LLC. The other offers are conveniently not submitted so that the bank has no idea there even were higher offers. The property owner/seller is often in on the scam, getting a kickback from the agent after the sale is done. At that point, the agent flips the property, earning a second commission and even more if s/he had an ownership interest in the purchase.

Folks, this is happening all over Southern California and presumably the entire country. Jardine is making an important point that not only do these real estate frauds rapidly deflate property values in neighborhoods by creating new sales comparables, destroying the equity of the neighbors, they fatten the pockets of crooked real estate professionals, who then use the proceeds to “invest” and flip more properties. Just as bad, because there is little law enforcement support to investigate and prosecute these crimes (I’d throw in jail time for these agents as well as disgorge them of their profits), there’s little risk to committing these real estate crimes.

The banks, by the way, don’t appear to care much about this short sale fraud: after all, they are reimbursed with TARP money (YOUR tax dollars) for all their short sale losses. Honest agents who try to report these crimes to the banks’ fraud departments find that, unlike healthcare fraud, most of the banks do not have hotlines to investigate tips of short sale fraud and will do little or nothing about it.

Read Jeff Jardine’s article in the Modesto Bee.

© Copyright 2007-2017 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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