“CURTAILMENT” short sale payment not on HUD is still fraud
On a short sale contract in Oakland, CA, I was told about payment out of escrow as “CURTAILMENT” which is defined as:
The act or process of reducing a company's operations in order to bring stability to the company. Curtailment usually occurs when the company has been experiencing unsustainable growth that it is unable to manage effectively. Tactics of curtailment include spinning off subsidiaries, laying off staff, and generally focusing the company's operations on the best products that it is able to create effectively. Curtailment is intended to improve efficiency and increase profits.
The first lien holder Wells Fargo gave approval with payoff of $6,000 towards 2nd
Second lien holder wants:
- $6,000 from Wells Fargo
- $3,000 additional payment to satisfy lien
Although the buyer may be willing to contribute the $3,000, his agent insists that this is
- Shown on the HUD closing/settlement statement as a contribution towards payoff of the Second lien
- Approved by the First lien holder
Listing agent refers to the additional payoff to the second lien holder as "curtailment" payment, and said this is not going to be on the HUD. Listing agent wants buyer to pay the $3,000. He says they’ve done this many times before, and that they don’t refer to the payment as a “contribution.”
Don’t do it!
Remember this news story? Big Banks Accused of Short Sale Fraud
And this video?
It’s FRAUD, whichever way one presents it, or by any other name. “Curtailment” indeed.
Also see: Short Sale Fraud: Three Scams to Avoid
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