Is Your Short Sale Legal?

Short sales - selling for less than you actually owe on the mortgage is legal and is very commonplace these days.  However, there are a few pitfalls you will want to avoid. The summation of an article, that originally appeared in the Orange County Register points out a few common scams that are taking place.

Orange County Register: Short sale fraud “heating up,” expert says A panel of short sale experts presenting at CALIFORNIA REALTOR® EXPO 2012 in Anaheim last week said that “fraud is heating up like a wildfire right now ...” and “we’ve got to be aware that this fraud is changing directions, jumping containment lines.”Among the most common forms of fraud are:

Flopping: non-arm’s length transaction, side agreements, and false information.  Scammers arrange to buy a home at an artificially deflated price intending to flip it immediately at its real value.

Non-arm’s length transactions:

The buyer in a short sale is related to the seller by blood, marriage, or some type of business or personal affiliation.  This is typically arranged by an underwater borrower to regain ownership of the property free from the mortgage debt.

Side agreements:

In addition to payments included in a lender’s “approval letter,” the buyer and seller have side agreements to pay off junior liens, short sale negotiators’ fees, or other third-party fees.

False information:

The transaction includes phony details in the closing settlement statement, or HUD-1, to hide buried costs and fees.
Read the full story as printed in the Orange County Register

For more information on Short sales or homes for sale in the Palm Springs area be sure to see PSAGENT.COM