Facing 30 Years in Prison For Violating Arms Length in Short Sale

Reblogger
Real Estate Agent with Shahar Management

This is the perfect reminder that when you are going to short sale a home or purchase a short sale you must abide by all of the rules.   The economy is in enough trouble without people further trying to scam the system. 

Original content by Jeff Pearl

Just another story to read for those people planning on scamming their lender in a short sale. This is just one of several cases I've read about lately. This is why I refuse to list and help any homeowner navigate through a short sale if I detect they aren't 100% honest, or if they indicate that it's going to be a pain to get them to provide the information that will be needed to keep a short sale process on track and moving forward. Too many people are involved, and I don't want to waste peoples time if the seller thinks it's just a big game.

 Yes, banks take Arms Length Agreements seriously. So if you think you're going to short sale your house to your parents or another relative, then rent it back from them with plans to buy it in the future, you are conspiring to commit a crime. Goodbye and good luck. Ask yourself, is the buyer connected to you in any way by blood or business? If yes, they are not eligible to purchase your short sale. Why do lenders like BOA ask for 5 digits of a potential buyers social security #? It's mainly so they can research and verify it's an Arms Length Transaction. I love the people that call me and say they want to short sale their house and they already have a buyer lined up, but they need an agent to help them.

Many people don't realize that these days lenders and FBI agents are actually going door to door to verify that  buyers who checked the box on their mortgage application claiming he/she was buying a primary residence, are actually living in the property. I know of one case where FBI showed up at a house 2 months after a closing where buyer had claimed he was buying primary residence, and the tenant answered the door. They asked if he was the owner, and he said no, he was renting and had been there for 2 months. They put that buyer on their list to file mortgage fraud charges against, which they did.

 

http://www.lasvegassun.com/news/2013/jun/13/henderson-couple-charged-bank-fraud-short-sale/#axzz2WWXtJqoq

short sale fraud

What are you in for? Well, we bought this house for $600,000.00, then the bottom fell out of the market. We heard about how all these people were getting rich flipping houses, so we decided to short sale our house for $300,000.00 to my cousin, then we were going to buy it back from him for $400,000.00. It sounded perfect, we would reduce our mortgage by $200,000.00 and he would make around $100,000.00 for his trouble. We didn't understand what an Arms Length Agreement was. It's the banks fault.

Short Sales are Debt Settlements that Need to be Taken Seriously.

 

Jeff Pearl / Lic in VA

Remax Distinctive - Reston VA

703-727-4876

Homes / Land / Farms / Historic

www.jeffpearlhomes.com

Equal Housing Opportunity Provider

 

 

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Debbie Walsh, GRI, CNE, CHMS, REM | Office (845) 283-3036 |

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Comments (13)

Alan Harris
Keller Williams Realty - San Diego, CA
San Diego Real Estate Broker with Keller Williams

Hello Debra,

Thank you for sharing this info. Easy money usually means an easy ticket to jail as well.

Jun 18, 2013 03:09 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

The real crime is that the banksters of the 2008 mortgage meltdown, and the years leading up to . . . of gotten off virtually scott free.  While two wrongs don't make a right, there's a real crime in our government not going after -- and jailing -- the bigger fish in this entire charade.

Jun 18, 2013 03:41 AM
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Debra,

A well deserved outcome.  What are people thinking?  A

Jun 18, 2013 04:02 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Debbie, people who try to scam the system think they are smarter than others.  Some how they do not look very smart when they are behind bars.

Jun 18, 2013 05:45 AM
Patty Da Silva, Davie, Southwest Ranches Cooper City, Plantation, Weston, REALTOR
BROKER of Green Realty Properties® - 954-667-7253 - Davie, FL
Top Listing Broker

I hope they are convicted if indeed they are guilty. I have been listing short sales since 2007 and only this year I had a seller who tried to sell the home to someone not arm's length... thankfully I have enough experience to have caught the scam before it happened. I fired the seller and I let her lender know what she was planning to do, they notated the account in detail so if she ever tries this again with another Realtor, her lender is on notice.

Jun 18, 2013 08:40 AM
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

They can throw the key away. The sentences are tough enough, that is why we keep hearing about this stuff on a regular basis.

Jun 18, 2013 10:38 AM
Brad MacKenzie
Brad MacKenzie - Duxbury, MA
Turning Houses into Homes on the South Shore

If people are so smart they can figure this out, why don't they just get a good, creative job?

Jun 18, 2013 12:13 PM
Sharon & Bruce Walter
Keller Williams Realty Lafayette, IN - Lafayette, IN
West Lafayette homes for sale
Debra, thanks for the re-blog. Now if they could pursue some of the fraud at the banking end of the equation that would be great!
Jun 18, 2013 11:11 PM
Kathleen Frawley
Keller Williams 916 730-4404 Elk Grove, Wilton, Folsom, Sacramento - Wilton, CA
South County Sacramento, 916 730 4404

If it sound too good to be true, it probably is.  I think it is unfortunate though that some golden parachute people are not going to jail as well.

Jun 19, 2013 01:00 AM
Nick T Pappas
Assoc. Broker/Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, @HomesBirmingham & Providence Property Mgmnt, LLC Hun... - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource

Debbie, I had a client using a short sale to extend their time in the house without having to pay a mortgage.  They were uncooperative about providing information...we parted company!

Jun 19, 2013 03:48 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Mortgage fraud is too common. Putting a few people behind bars might deter some others.

Jun 19, 2013 04:33 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Debra, great re-blog and I am with Jeff I have turned down two Short Sales in the past six months.....

Jun 21, 2013 11:24 AM
Debbie Walsh
Shahar Management - Middletown, NY
Hudson Valley NY Real Estate 845.283-3036

Alan - It is a shame these kinds of things even happen.

Carla - I totally agree with you.

Alex - Agreed.

George - Well said!

Patty - Good for you!  Not everyone would have stepped up!

Joe - Exactly!

Brad - Good point!

Bruce - We keep waiting....

Kathleen - Truer words never spoken....

Nick - Good for you!

Roy - You are right!

Endre - They are definitely tough work.

Jun 25, 2013 05:40 AM