Short sale to fool the bank?

no-windows · 06-22-2009

This looks like one of those short sales scam where the seller sells the house to a friend at below market price (who may then rent the house back to the seller). The house was on the market for 10 days, but the listing agent refused to show it. Now it is pending:

http://www.redfin.com/CA/San-Jose/3239-Yellowleaf-Ct-95135/home/1208180

Lysistrata · 04-13-2011

I don't know but this kind of short sale usually irks me. They bought it in 1988 for $218k, and the short sale price is $405, but the listing says it's a fixer and needs a new roof, paint, carpet and appliances. I hope they spent that HELOC on their kid's college tuition or healthcare, since they clearly didn't put it into their home.

Did the listing agent give a reason for refusing to sell it?

ptiemann · 08-07-2009

no-windows wrote:
This looks like one of those short sales scam where the seller sells the house to a friend at below market price (who may then rent the house back to the seller).

The banks are getting smarter. I did one short sale only, and I (as buyer and buyer's agent) had to sign that I did not know the seller prior to this transaction etc. The bank in my case was CHASE.

TEINS · 09-10-2010

I know of someone who did exactly as the OP described. Had over a million dollar mortage on the home, short sales it to a LLC (bunch of friends). Was listed for one day went pending and sold within 60 days. The guy never left the home and is now paying back the LLC at the newly reduced price of about half a million. This is complete fraud on everyone involved in this deal.

I am sure this is happening in many different homes.

lexa · 05-13-2009

SS is gray market and should not even be allowed, just to exclude fraud.

At the min, mortgage services should only deal with pre-approved RE agents, who have their business on regular basic, their performance checked and monitored, so that makes them motivated to avoid fraud in favor of long term business.

Sonal_Basu · 07-31-2010

I am sure there are small number of people taking advantage of the short sale product to get out of their home purchase mistake.

Few days ago, we put in an offer on home being sold in a short sale transaction. The counter came back with these conditions. Current tenant to receive a 13 month lease with rent amount of $2,700. The new buyers to waive renter deposit from the current tenant. The seller and seller's agent to be free of any liability from damage caused by current tenant.

When I inquired further on the conditions, the listing agent stated that the owner has been collecting $2,700 rent from the tenant but has not paid mortgage payment in past 2 years. Now, the owner feels guilty about throwing the tenant out on the street and wants to do right by the tenant thus the counter offer! Can you believe it?

Of course, my clients found themselves another home and are happier with their choice.

Sonal B

MyCousinVinny · 06-13-2011

Sonal_Basu wrote:
I am sure there are small number of people taking advantage of the short sale product to get out of their home purchase mistake.

Few days ago, we put in an offer on home being sold in a short sale transaction. The counter came back with these conditions. Current tenant to receive a 13 month lease with rent amount of $2,700. The new buyers to waive renter deposit frorm the current tenant. The seller and seller's agent to be free of any liability from damage caused by current tenant.

When I inquired further on the conditions, the listing agent stated that the owner has been collecting $2,700 rent from the tenant but has not paid mortgage payment in past 2 years. Now, the owner feels guilty about throwing the tenant out on the street and wants to do right by the tenant thus the counter offer! Can you believe it?

Of course, my clients found themself another home and are happier with theier choice.

Of course the owner feels the guilt, now that it's somebody else paying!