Short Sale Fraud
Home buying and selling is one of the more important decisions most citizens make throughout their lifetime. While it can be extremely satisfying and rewarding to find the home of your dreams, scammers are always out there leveraging any situation to steal your hard earned money, even in the case of short sales.
There are multiple schemes associated with short sales. For example, an unscrupulous short sale negotiator may attempt to facilitate the sale of your home to an affiliated party at below market value, with plans to resell it immediately for a profit.
Although this may achieve your goal of avoiding foreclosure, it may be considered fraud if your loan servicer was misled regarding the value of your property. Another fact to consider is that an artificially low short sale price can leave you with additional tax liabilities or a larger amount remaining on your loan balance, if applicable.
Tips for selling your home through a short sale:
- Beware of agents or companies that charge upfront fees or ask you to transfer the title of your home to a third party or into a trust. The transfer of title should be completed by your closing agent, and should be done at the conclusion of the short sale process.
- Seek the assistance of a licensed real estate professional to represent you.
- If you engage the services of a short sale negotiator, remember that some states require negotiators to have a real estate license.
- Seek the advice of an accountant and an attorney to discuss potential tax implications and the possibility of a deficiency judgment for the amount of debt that is forgiven or if there are subordinate liens on your property.
- Beware of purchase offers that are well below market value, as well as any payments, transfers of funds, or payoffs that are not included in the sales contract and approved by your servicer.
- Make sure that your servicer is aware of all aspects of your transaction and that all activities are documented. Side agreements, undisclosed payoffs or hidden addenda should alert you to possible fraud.
If you believe you have witnessed or been victimized by a short sale scheme or wish to report suspicious activity, please file a report here.