The Morning Report
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I heard today from Peter Toner; he’s a local Realtor whom The New York Times interviewed for that recent piece on price ranges on home listings in San Diego.
Toner passed along a link to his real estate blog, where he’s written recently about mortgage fraud. He said he’s seen another twist on the cash-back scheme I wrote about today.
Here’s the twist he’s found:
… others have figured out another way to defraud the industry. The set up is simple: Joe Smith’s mortgage has adjusted from his fancy 3% rate to an ugly rate of 11%. His home is not worth what he paid for it 2 years ago. Joe calls his lender and begs to be relieved of some of the debt he owes and asks his lender to allow him to list the home as a short sale. Joe then asks his brother-in-law to purchase the home at the new “lower” discounted price of the short sale. Joe’s brother-in-law fraudulently purchases the home as “owner occupied”, saves thousands for Joe Smith and Joe stays in his home with the help of his brother-in-law.n what wrong with this one?
It rips off the original lender …. This type of scam also hurts our real estate market (this time in reverse) by lowering the sales prices of homes in a neighborhood, thus lowering the comparable market sales used for future homes listed for sale. Plus it fraudulently adds to the numbers of short sales the real estate and mortgage industry tracks.
Keep in touch if you think you’ve seen any of these schemes in your neighborhoods. You can always pass along your thoughts by clicking my name below.