Agree this is a big problem (see my comment on the 92011 thread regarding this type of transaction).
There is only one way for the banks to avoid being ripped-off (and it is indeed theft). They have to use their own agents and appraisers. If it’s the bank that’s taking all the price risk, then they should be the ones to choose the listing agents, not the FB/”seller”.
Heard some stories that sellers and buyers (friends or relatives) are colluding to steal from the bank. They arrange a short-sale, and push for the buyer (a friend, not known by the lender) to get the house at a reduced price. After they get the house, they flip it for market price and split the profit.
The FB seller gets off scott-free (no recourse, no debt, no BK or foreclosure on record) and the flipper/buyer-friend gets almost a guaranteed profit if they lock-in a below-market price. They also know what the true market price is because they see the offers from the other, real, buyers — whose offers are not shown to the banks.
Is it legal? Who knows, but this definitely looks like fraud to me. At a time when the taxpayers are forced to fund or subsidize the housing and finance sectors, this should be punishable by life in prison and seizure of all personal assets.
