Washington Post Gives Real Estate Agents a Black Eye - More Mortgage Fraud Reports

By
Services for Real Estate Pros with Marte Cliff Copywriting

Sheesh! You didn't need this!

While agents like all of you here at Active Rain are working hard to present and maintain a professional, trustworthy image, the Washington Post is making it sound like agents handling short sales are a bunch of crooks.

According to this article, agents are teaming up with investors to defraud both the banks and the owners of underwater homes.

The agents list the homes and find buyers willing to pay fair market value. But they don't tell the bank about those buyers. (I'd have to assume that they also don't tell the sellers, since they also stand to be damaged.)

Then, assured that they have a buyer in hand, their "investor friend" makes an offer for many thousands less and the agent backs it up with a BPO showing that this is the most they could get for that house. They close the sale to the investor, then flip the house to the legitimate buyer.

In the end, either the bank or the homeowner loses, and in many cases it's the homeowner. They're the ones saddled with a huge deficiency judgment. I'll also assume that this kind of listing agent wouldn't do much for the homeowner in the way of "negotiating away" the deficiency.

I love seeing people make money. And I'm all for investors who take damaged houses, repair them properly, and make a good profit when they re-sell. Adding value and creating profit is the American way.

But this kind of dirty dealing gives all real estate investors and real estate agents a bad name. And the Washington Post is simply playing on it to make a sensational story.

Skunk award goes to Washington PostThe least they could do is say "A small handful of unscrupulous investors and agents..." Instead, they make it sound like this practice is widespread. I think they get the "Sunk Award" for today.

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Rainmaker
1,008,650
Corinne Guest
Corinne Guest, REALTOR® | Barrington Realty Company - Barrington, IL
Barrington Lifestyles

I have twice been approached by these types of investors. They don't get it when I tell them to take a hike. But Corinne you'll make more money is what they say. In other words they could care less about the people and think I only care about a pay check. They are so not helping and here's an honest opinion. If they were to approach one of my agents she might say yes. Only because she has not idea about short sales, so in a way they are praying on the un-educated. 

Jun 27, 2011 11:05 AM #1
Rainmaker
118,730
Kathleen Vetrano
RE/MAX Gateway - Falls Church, VA
Helping YOU Achieve YOUR Dreams

We all know that many buyers who intend to use the property as a primary residence are bidding against cash investors.  Often it is very difficult to get answers or status.  And often you hear that cash is king.  A full approval is right up there with cash.  I understand the privacy component.  If this is going on, I say prosecute.  Right is right and wrong is wrong for all parties involved in this type of scenario.

The damage is far reaching on many levels.  The good thing is that it is being brought to light.

Jun 27, 2011 11:15 AM #2
Ambassador
2,738,698
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

HA!  If you knew the Washington Post, this would not surprise you at all.  The Post has always been willing to take huge advertising fees from us while publishing articles harmful to REALTORS for as long as I have been in business.

Jun 27, 2011 11:19 AM #3
Rainmaker
1,529,738
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Corinne - I believe most of the fraud that agents get involved in is a result of not knowing. (No excuse, that should be part of real estate 101) However, I have known an agent or two who would be more than happy to participate.

Once we had some fraudsters hit town with a scam that involved getting accepted offers on "bottom of the barrel" houses - then never closing. An agent I knew at the time told me that she had called and tried to get these guys to go to coffee with her. She told them "I don't know what your scam is, but I want in on it." She was PO'd because they wouldn't tell her.

Kathleen - I agree. Shine light on it and prosecute. But don't try to make it sound like all short sale agents are in on it!

Lenn - They believe in biting the hand that feeds them. How nice. I suppose that will get worse as more agents move their marketing on line and off print.

Jun 27, 2011 11:56 AM #4
Ambassador
3,083,559
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

I reported one of these to the FBI.  They took quite an interest.  And they suspected the fraud went much higher than just hiding the Buyer who would pay full market value.  Not only did they get the distressed seller to sign over the deed, putting the seller in default of his note, but the FBI seems to think they had an inside contact at the Short Sale bank.  There is way too much of this stuff going on.

Jun 28, 2011 02:23 AM #5
Rainmaker
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Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Chris Ann - Good for you! I'm not sure I'd know how to go about reporting something to the FBI. It does seem that they would need a contact within the bank in order to get a really low offer approved.

Seems like everywhere you turn there's someone in a position of trust who is willing to betray it for $$.

On the good side, there are still plenty of us who refuse to walk that path. We just don't make headlines. They simply don't print "Chris Ann passes up big bucks in favor of honesty."

Jun 28, 2011 05:42 AM #6
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Rainmaker
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