Special offer

Fraud and Short Sale Transactions

By
Real Estate Agent with Century 21 Award San Diego

Distressed property transactions and fraud are becoming more synonymous day by day in the real estate world in which we live. In Southern California, distressed property transactions account for the majority of the home sales (San Diego County 48%, Orange County 43%, Los Angeles County 48%, Riverside County 60%, San Bernardino County 65%, Ventura County 51%). A number of government agencies have created task forces to help against fraudulent activity and the Department of Real estate has also created a consumer alert web site. We all know that the lender is the one who dictates the rules on distressed property transactions, especially in short sale situations. These rules, when not complied with. could cause criminal charges to occur. In one case, an agent entered into two separate short sale listing agreements whereby the allowable compensation to be paid to the licensees would not exceed 7% of the sales price. However, he then required the buyers to pay an additional 3% short sale negotiation fee, a fee neither concealed nor disclosed to the lenders or sellers. This agent was forced to not only surrender his real estate license but also serve 90 days in jail, pay a restitution fee of about $25,000 and be on probation for three years. So here are things to be aware of: Were there any liens on the property that were originally shown on the HUD that are suddenly now paid out of escrow? Any red flags that the buyer and seller are connected and commiting lender fraud? Was there recent activity on the property like transfers, liens, etc? Are all disbursements being paid at COE shown on the HUD submitted to the short sale lender? Finally, Is the second lender getting a larger payoff than the first lender and the additional funds are not disclosed on the HUD? Protect yourself in San Diego real estate transactions.

 

Comments (2)

Shanna Day Team Leader AZ & UT - Call 480-415-7616
Keller Williams Realty EV (AZ) & Keller Williams SLC (UT) - Mesa, AZ
Top 0.33 of 1% of 79,000 AZ Realtors

There are so many things going on out there in the Short Sale world.   I tell the agents on my team all the time... don't be tempted to do anything that will come back to bite you!  I think that the attorneys will have a hay day for years to come trying to find all the crazy transactions that are going on. 

Aug 04, 2012 03:57 AM
Curtis Van Carter
Better Homes & Gardens Wine Country Group - Yountville, CA
Your Napa Valley Broker Extraordinaire

Scott

I guess we should feel fortunate on two fronts here in the Napa Valley. Our distressed sales just broke under 40% from the first time in the year I have been tracking them and we have very little fraud here. Good look in dealing with those in your area. cheers cvc

Aug 04, 2012 04:18 AM