Let me start by saying that I've been around the "short sale" block many, many times by now, so this isn't my first rodeo. Today, I found a double-whammy in a deal I was trying to pull together for my buyer. But I am still shocked and amazed when I come face-to-face with outright fraud.
Seems the seller had (count 'em): not one, not two, but THREE mortgages and/or liens on his home. The listing agent had processed short sale offers with the 1st mortgage lender previously and had negotiated a price, and had even come to terms with the 2nd mortgage (who would get the traditional 10% pittance of what they are owed, but OK, that's the way that works).
The fly in the ointment appears to be the 3rd lienholder, which has refused to settle for anything but being paid in full before they release their lien.
And here's the catch: the seller wanted the buyer to pay off the third lienholder prior to closing. Let me say that again: they wanted my buyer to pay a huge amount of money to clear the 3rd lien BEFORE they even owned the house!
On top of all this, the seller also wanted my buyer to pay a large amount of cash for the personal property being left in the house (like refrigerator, washer, dryer, range, even built-in appliances).
Oh yes, and we had to keep this all hush-hush...these transfers of cash could not be shown on the HUD-1 settlement statement at closing. Well, DUH! If these payments showed up there, the 1st mortgage holder would simply shut down the deal.
Warning bells should be ringing in your collective ears by now.
*********FRAUD ALERT**********FRAUD ALERT**********FRAUD ALERT**********
Short sale fraud is defined (this version from Freddie Mac) as "any misrepresentation or deliberate omission of fact that would induce the lender, investor or insurer to agree to the terms of a short payoff that it would not approve had all facts been known."
If it doesn't smell right, it's usually not right. I called my buyer and said this was a bad deal, and we are on to the next one.
Yeesh! Some people's kids.
Barbara Charlton
RES Realty
Search Lakeville homes for sale at www.BarbaraCharlton.com
Cell 612-414-6721
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