The California Department of Real Estate say it has been alerted to cases of fraudulent short sales. The Department of Real Estate is issuing warnings about fraudulent short sales. As reported in The Orange County Register today by Kelli Hart.
Short sales using straw buyers. The majority of this type of sale is by an unlicensed person who wants to flip the property. In some cases they use a short sale facilitator who looks for homes that are on the verge of foreclosure and persuades the lender to accept a low offer. This is usually done using straw buyers, questionable or self-interested broker price opinions or appraisals and by failing ot disclose that a sale at a higher price has previously been negotiated.
Secret payments to a junior lein holder outside of escrow without the knowledge of the senior lien holder. This is definitely a way to commit fraud. Such undisclosed payments are likely illegal. All payments must appear on the HUD 1 statement.
There should not be dual or multiple contracts, only one that show all the conditions of the sale. That would include a second verbal contract that is not shown in the written contract.
Always deal with an honest and forthright Realtor who know the laws when doing a Short Sale. Don't get caught by people who do fraudulent short sales.
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