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Don't Get Suckered Into Short Sale Mortgage Fraud

By
Real Estate Agent with Elizabeth Anne Weintraub, Broker DRE #00697006

It's hard to think like a crook. Part of the problem is crooks are often not very smart. I mean, if they were smart, they would think of some other way to make a living than to be a crook. Because there are other options, you know. You don't have to turn to a life of crime to pay the bills.

I'm not talking the guy who shows up to rob a bank and leaves evidence of his home address at the teller's window. Or the burglar who breaks into your home and leaves his cell phone on the kitchen counter. These are the types who might pull on an inside-out t-shirt from a laundry basket and consider themselves well dressed. The kind who have crap for brains. I'm talking about the kind of crook who thinks he or she is much smarter than everybody else yet this person is still a crook.

There are a ton of crooks in real estate. Sometimes, they come out of left field and you never see them coming toward you. These types are generally very charming individuals. They could sweet talk their way into the Pentagon. Unfortunately, I have to continually be on guard for them because I am a Sacramento short sale agent. The short sale business, especially, is ripe for crooks. As a seller, it must be hard to know who to trust.

On the one hand, you've got banks like Bank of America making its SHORT SALE SPECIAL OFFERS. Sending out emails with splashy red lettering to short sale agents advertising a LIMITED TIME OFFER. It's called the SHORT SALE RELOCATION ASSISTANCE PROGRAM, and it pays $2,500 to $30,000. It's cash for a short sale. It's legitimate. The bank has been doing this for several years but never in such a big way as it is now.

So I wasn't really on guard yesterday when this agent called me out of the blue. He wanted to know if I was interested in handling a referral he wanted to give me for 1041 Havenhill Street. I looked up the property and we talked about it. I noticed it had FHA financing, so I began to explain how an FHA short sale works. He cut me off to say the sellers wanted more money.

Then, he began to explain how he had sold several short sales in New York. I'm thinking to myself how did he do that? Does he have a real estate license in several states? He launched into a proposed scenario in which the buyer makes a side agreement with the seller and agrees to pay the seller cash at closing. After all, he had done that in New York, he said. There was a pause in our conversation as I stared at my cell phone in amazement as my jaw fell open.

Short sale mortgage fraud. That's what he was proposing. I asked him if that was his idea of how to do a short sale -- to commit mortgage fraud? My phone suddenly went dead. He had hung up on me.

I'm not going into all of the reasons not to be a crook. There are plenty of them. Let's just look at one reason, if you can't think of any other reason. If you commit mortgage fraud to do a short sale and get a release of liability, that release can be rescinded. Which then totally defeats the whole purpose of a short sale. Don't try to think like a crook. You're too smart for that.

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Elizabeth Weintraub is co-partner of Weintraub & Wallace Team of Top Producing Realtors, an author, home buying expert at The Balance, a Land Park resident, and a veteran real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown, Carmichael and East Sacramento, as well as tract homes in Elk Grove, Natomas, Roseville and Lincoln. Call Elizabeth Weintraub at 916.233.6759. Put our combined 80 years of real estate experience to work for you. Broker-Associate at RE/MAX Gold. DRE License # 00697006.

Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.The views expressed herein are Weintraub's personal views and do not reflect the views of RE/MAX Gold. Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice; it could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.

Comments(9)

Daniel J. Brudnok, REALTOR
Berkshire Hathaway Home Services Fox & Roach, REALTORS - Exton - PA License #RS-225179-L / Delaware License #RS-0025038 - Downingtown, PA
SRES, e-PRO,ABR,GREEN,CSP

Elizabeth,

It take all kinds these days and I like you want no parts of anything that will get my Client, me or anyone in trouble.....I like to sleep at nights.

May 18, 2012 11:31 PM
Linda K. Mayer
License # 01767321 - La Verne, CA
Realtor, SRES, SoCAL, A REALTOR YOU CAN TRUST

Can you believe the nerve!  Like Dan said, it takes all kinds, and some of those kinds are just plain crazy!

May 19, 2012 01:36 AM
Nancy Conner
Olympia, WA
Olympia/Thurston County WA
I've had that kind of call too...and they insist their attorney says it's all just fine and dandy. Ummmmm.....no!
May 19, 2012 01:39 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

I've had calls like that.  Somehow, my callers never hang up but argue with me about how it's NOT mortgage fraud.  I'm usually the one that hangs up.

May 19, 2012 02:12 AM
Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

I watch short sale listings in the MLS with the zero days on the market with a well below market price under contract.  I know there is a percentage that one close but when they do there is no doubt that something fishy is going on.  I have the VA investigating one now where it was purchased with a VA loan and 3 weeks later was back on the market for 100K more.  Nope not right at all.

May 19, 2012 08:35 AM
Todd Clark - Retired
eXp Realty LLC - Tigard, OR
Principle Broker Oregon

Unfortunately sellers fall in to the trap of promises of people like this all the time not realizing that they could go to jail if they are caught. 

May 19, 2012 09:52 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Hi Dan: I sleep like a log.

Hey Linda: You're back. Your lovely face is back, I mean. It was gone for a long time.

Hi Nancy: There are crooked lawyers, too. And stupid lawyers as well. Nobody is immune.

Hi Chris Ann: Oh, this guy tried to argue but I stopped him and played broken record. They never think they are breaking the law. He got tired of me repeating, Nope, I'm not doing mortgage fraud, so he hung up.

Hi Cindy: Aren't there restrictions on a VA loan like you have to live there a year?

Hi Todd: It's hard to look a gift horse in the mouth, especially when the crook is telling you it's OK. Plus, people often don't believe they will get caught.

May 19, 2012 10:12 AM
James Dray
Fathom Realty - Bentonville, AR

Morning Elizabeth the question I have is are you going to report this? Second did the number show up on your phone? Enjoy the day

May 19, 2012 08:37 PM
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • GRI • HAFA • PSC Calabasas CA

i had these talks with agents, sellers, buyers. With our prices and high competition to buy a short sale, everyone becomes very ''educated''.....

I had a seller ( lawyer, retired), he made a lot of research( where do you think? online of course!, trulia and AR were his most popular) and found: if you sell a personal or intellectual  property~ it is not part of a short sale, it is ok........ long painful story short~ with low inventory~ there are a lot of crazy staff over there now. It is a personal ethical choice of each if to be part of it or not~ and if one decided to do that, just remember about possible consequences.

May 21, 2012 02:46 AM