Short Sale Flip Fraud

Short Sale Flip Fraud - Its not a law; nor is it an
official policy, but its definitely going to be a problem
regardless. The latest opinion released from Freddie
Mac on short sales presents legal and practical issues
for short sale investors. On the call we'll be taking a
look at these issues.
The organization posted a new educational article
titled Emerging Fraud Trends: Short Payoff Fraud.
The article stated, in short, that short sales could be
fraudulent if the lender does not have information
about a pre-arranged flip of the property after the
short sale to another buyer. This is a serious yellow
flag for short sale investors who make their living
negotiating good short sale deals with banks, then
selling their new properties to other buyers for a profit.
The Freddie Mac poster went on to describe scenarios
and red flags for short payoff fraud. The scenario
involved a facilitator, whose description matched that
of a real estate short sale investor, who negotiated a
deal with a lender to short sale a home worth $80,000
with a debt of $100,000 for $70,000. The facilitator
does not disclose that he already has an outstanding
offer for $95,000 from a second end-buyer. The second
the facilitator puts his profits in his pocket, Freddie Mac
considers him guilty of fraud because his negotiations
caused Freddie Mac to ultimately take a larger than
necessary loss on the sale of the property.