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Archive for the 'Flopping' Category

Short sale fraud emerges as new real estate fraud

June 11th, 2010 at 11:41am

It was bound to happen.

As the real estate market has changed, so have the schemes being concocted by criminals, some of them real estate professionals.

Short sale fraud can occur in a number of forms. The primary form occurs when the listing agent (Realtor) for a property being marketed as a short sale receives multiple offers and does not submit the highest or best offer to the bank or loan servicer. That is because either the offer submitted is by the agent’s own buyer, in which case the agent is motivated to receive both the seller’s and buyer’s sides of the commission, or the agent has been bribed by either the buyer or the buyer’s agent to submit that buyer’s (lower) offer and to “forget” to submit the other offers.

If there are any agents reading this posting, most of you have probably experienced being told your own offer was not accepted and yet seeing the property close at a lower sale price, again, often with the listing agent representing the buyer. There is nothing that can be done unless the buyer’s agent can somehow find the employee inside the bank that negotiated the short sale. But banks intentionally make it difficult to find these employees.

I also know from personal experience that even the banks’ own fraud departments have little to no interest in investigating possible short sale fraud. In my transaction, the lender was Countrywide and the servicer was Bank of America. I spoke with and emailed one of the managers at Bank of America’s fraud department. She never followed up and acted irritated when I followed up with her to ask why she was not initiating an investigation.

Read an article about this type of short sale fraud, called “flopping”,┬áin Bloomberg Businessweek.

© Copyright 2007-2018 Monique Bryher

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