December 1st, 2011 at 6:28pm
You are thinking of selling your home next year and using the equity to fund part of your retirement or a move to a smaller property. You have spent years building that equity, including keeping your home in impeccable condition in a neighborhood known for pride of ownership.
Your neighbor has just listed his home with a real estate agent on the Multiple Listing Service as a “short sale.” A short sale occurs when a property is sold for less than the value of the loan owed against it.
Despite a tough real estate market, your neighbor’s home sells in one day for cash. Oh, and did I mention the seller and his/her bank agreed to take 10 percent or more off the listed price without the benefit of having the property on the market even one week so that local real estate agents could preview it with their buyers and bid competitively? A listed price that the presumably competent agent determined by analyzing local neighborhood values?
In this example, the borrower sold his home to a relative, one with a different name. He did this so that the lender, which requires the sale to be “arms-length,” was unaware that the new buyer would not be moving into the property, thereby allowing his relative to remain on the premises, which is forbidden under the terms of the short sale. In the long term, the original borrower will most likely “buy” the property back at some point from his relative, achieving a huge write-down in his principal, something I refer to as “mortgage laundering.”
Welcome to the world of short sale fraud, one in which the normal rules of a real estate transaction often fly out the window in favor of unenlightened self-interest, conflict-of-interest, bribes, kick-backs and lack of proper due diligence by lenders. And it often occurs fairly openly because the chances of getting caught and punished are between slim and none.
This article was taken from one I wrote for The Patch.
To learn more about short sale fraud and how it is distorting the housing market and economic recovery, read my book “How to Commit Short Sale Fraud . . . and Get Away with It.” A free sample download is available on this blog.
September 2nd, 2011 at 9:54am
Dear Readers,
Short sale fraud is the real estate crime of this decade. Anybody who has had his or her home equity stripped by a neighbor committing short sale fraud knows this. So will law enforcement soon, when political pressure will be applied to prosecute the offenders.
“How to Commit Short Sale Fraud . . . and Get Away with It” is my upcoming e-book that discusses the social and economic implications of short sale fraud, REO fraud and real estate fraud in general. Please keep watch for it, as I will be offering it for sale on the California Real Estate Fraud Report and Amazon/Kindle.
If you are a member of law enforcement (U.S. attorneys, prosecutors, District Attorneys, investigators with federal, state or local agencies) interested in reading it and are willing to write a brief testimonial, please contact me about obtaining an advance copy of my book.
Real estate fraud is an enormously profitable white-collar crime and it takes all of us to fight it.
Monique Bryher, Publisher
California Real Estate Fraud Report
August 24th, 2011 at 2:08pm
One of the hazards of selling REO (bank-owned) properties is what happens between the Trustee Sale (foreclosure) and moving the new family in: squatters and vandals. This creates stress for the neighbors, more work for law enforcement, losses for the insurance carriers and depreciates property values.
Sometimes the vandalism is caused by the former owners; in a sense, it is a form of REO fraud since part of the purpose of the vandalism is to deprive the bank of part of its asset.
Ann Brenoff of AOL Real Estate interviewed me and another real estate agent for this article she wrote. Click here to read it.
August 8th, 2011 at 8:51pm
A survey taken by the National Association of Realtors (NAR) and published in DSNews.com reveals that short sales are at the top of the list for legal issues. REO sales are also the cause of the same.
The report, called Legal Scan: Legal Issues Facing Real-Estate Professionals, blames many of the problems for inadequate training of real estate agents in both short sale transactions and REO transactions.
My note: Although there is no shortage of free or low-cost training for both, these transactions are inherently more complicated than conventional (equity) sales. As readers of this blog know, complexity = more opportunities not only for confusion and honest mistakes, but also fraud for those inclined to create and take advantage of others (short sale fraud, REO fraud).
The other common causes of disputes in real estate transactions are agency issues, disclosures issues (usually failure to disclose) and RESPA (the federal Real Estate Settlement Practices Act) violations. In a normal market, non-distressed real estate market, these are the usual causes of lawsuits and administrative complaints filed against real estate agents.
By the way, I could not find a copy of the NAR report, either on its website or by linking from other websites reporting on it.
Read the original article on DSNews.com.
August 11th, 2010 at 4:47pm
If home buyers thought the near-collapse of the real estate market would make purchasing a home any easier, many by now have had second thoughts. The steep drop in prices in most of the communities in Los Angeles County has not made purchasing a home as easy as one would think. Why not? Because fraud is still prevalent in real estate transactions; the schemes are just different than before the bubble began its burst in 2007.
Read the full article by Monique Bryher in the KPCC Freeway.
