Wednesday, December 03, 2008

Short sale scam

Maybe I'm naive, but I just heard about this short-sale scam yesterday. Apparently, here's how it works. A seller lists his home for a short sale price. The buyer is a relative with a different last name -- so as far as the bank knows, it is certainly an arms-length transaction. The seller goes on living in the property after close of escrow, making much lower payments, through the relative on title, on the same house. The lender is none the wiser.

There is also subtle discouragement of other buyers and showings in order to further the scam. For example, the property is listed on the wrong mls, it is never available for showings, a potential buyer is told that there are so many offers in that the seller and bank will not look at any more, etc.

The vast majority of short sales are legit. But if a buyer you know encounters a difficult-to-see-buy short sale home, this kind of scam may be going on.

No wonder so many lenders are just not responding to short sales and just going ahead and foreclosing.


  1. Ray Bosworth9:02 PM

    I'm an Attorney who works with folks in resolving their Debt. What I'm seeing is a growing trend of "Default Judgements" on the rise. In California among other states there is a term that applies to "Purchase Money" loans as they are Non-Recourse. What this means is if your home Forecloses and it was purchase money you walk free and clear.

    However a majoity of folks have pulled cash out of their homes over the last decade in the form of a new First Trust Deed and/or HELOC. These loans are not to be confused with Non-recourse loans.

    Many clients visit our office after the foreclosure and now the Lender is coming after them for the balance. The default balance is calculated by taking the original Loan amount, minus the Banks sale price, commissions etc which ussually are quite steep. They realize that most folks recover over the next 5 years and now have sufficient asstes for the Bank to recover on.

    My advice...... SHORT SALE the property. Don't allow it to foreclose. I have heard a few good things about Cornerstone Credit Advisors in Corona, Ca. They have cash buyers lined up and a team of negotiators who get the job done. Apparently they have dealt enough with the Banks that their relationship is solid enough to get it done.

  2. Watch Dog12:27 PM

    The guy who wrote about the company cornerstone by the name :
    " Ray Bosworth " isn't his real name. His real name is Ray Roscowicz and he owns cornerstone. Why would some one believe a guy who hides his name? Is he trying to hide some thing else too?
    Read ther review in from BBB under thair company name:"Cornerstone Credit Advisors" - i am sure you will be shocked. Now we have another guy who wants to scam simple readers like us. Go figure !