California Real Estate Fraud Report

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Realtors Accuse Banks of Short Sale Fraud

Short sale fraud has quickly become the real estate fraud du jour. Usually it is committed by property owners who want a write-down of their mortgage and it is facilitated by crooked real estate agents. No matter what the motivation, any party to this transaction is committing short sale fraud.

Now, according to Jeremy Brandt, CEO of 1800CashOffer, the banks are jumping in, allegedly in some cases demanding kick-backs of cash outside the sale. This is a clear violation of the federal RESPA (Real Estate Settlement Practices Act) law. Anyone who is caught could be prosecuted, which could result in prison time for all parties, stiff financial penalties and the revocation of professional licenses.

Brandt and Kayte Gentry of Keller Williams Integrity First Realty are telling stories of second lien holders demanding cash outside of escrow in order to release their liens, in which normally they are paid perhaps 10 cents on the dollar. Brandt says he has spoken with dozens of real estate agents across the country who have complained that banks holding these junior loans are threatening to kill the transaction unless paid under the table, i.e., the money is not declared on the HUD-1. All but except Gentry are afraid to speak up for fear of retribution from the banks.

Fingers have been pointed at JP Morgan Chase, Bank of America and CitiBank. JP Morgan Chase issued a “no comment” response (is that like taking the 5th Amendment against self-incrimination?) and BofA and CitiBank issued denials.

If the accusations are true, the banks are adding short sale fraud to the list of crimes they are committing against taxpayers and communities.

If you know of any instances of short sale fraud, please contact me by email. Your response will be kept entirely confidential.

Watch the video of the CNBC investigation here.

© Copyright 2007-2018 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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