new type of real estate fraud?

[cantab]

It seems the following is getting more common, both for short sales and REOs: the listing agent colludes (explicitly or tacitly) with a favored buyer, and the buyer gets the property for less than someone else was (or would be) willing to pay.

What makes this fraud possible is that the former owner/occupant of the property doesn’t care about getting the best price, because s/he is losing money anyhow.

For both short sales and REOs, a bank officer has to approve the sale, not the former owner. The bank officers are overloaded and don’t earn or lose money personally based on the sale price. The bank senior executives don’t really care about sale prices, because the bank has already taken a huge write-down, and/or it is being bailed out, and/or the loan is securitized so the mortgage owner is someone else.

This fraud is possible both with short sales and with REOs. It is hard to prosecute, since doing so essentially requires proving a negative.

[CA renter]

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.

[CA renter]

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.

[CA renter]

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.

[CA renter]

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.

[CA renter]

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.

[NotCranky]

Is it fraud or the path of least resistance? I think the listing agents doing it are taking the path least resistance as much as doing outright cheating. They spend a ton of time negotiating deals for which the other agent represented buyer has vaporized when the lender finally gets around to answering the offers. It is quite possible the lenders have told them to get offers that stick too. I am sure there is also some cheating. Not all of it is though,maybe not even much.

As I said on the other thread dealing with the topic, look for a trend in easier access to short sale deals. Not just for crooks but market wide.There may be something behind the scenes that motivates improvement in the movement of this subset of listings.

I am not trying to change any one’s mind because I am not really sure about the details. I have seen other evidence of path of least resistance behaviors from listing agents. It’s not uncommon.

[NotCranky]

Is it fraud or the path of least resistance? I think the listing agents doing it are taking the path least resistance as much as doing outright cheating. They spend a ton of time negotiating deals for which the other agent represented buyer has vaporized when the lender finally gets around to answering the offers. It is quite possible the lenders have told them to get offers that stick too. I am sure there is also some cheating. Not all of it is though,maybe not even much.

As I said on the other thread dealing with the topic, look for a trend in easier access to short sale deals. Not just for crooks but market wide.There may be something behind the scenes that motivates improvement in the movement of this subset of listings.

I am not trying to change any one’s mind because I am not really sure about the details. I have seen other evidence of path of least resistance behaviors from listing agents. It’s not uncommon.

[NotCranky]

Is it fraud or the path of least resistance? I think the listing agents doing it are taking the path least resistance as much as doing outright cheating. They spend a ton of time negotiating deals for which the other agent represented buyer has vaporized when the lender finally gets around to answering the offers. It is quite possible the lenders have told them to get offers that stick too. I am sure there is also some cheating. Not all of it is though,maybe not even much.

As I said on the other thread dealing with the topic, look for a trend in easier access to short sale deals. Not just for crooks but market wide.There may be something behind the scenes that motivates improvement in the movement of this subset of listings.

I am not trying to change any one’s mind because I am not really sure about the details. I have seen other evidence of path of least resistance behaviors from listing agents. It’s not uncommon.

[NotCranky]

Is it fraud or the path of least resistance? I think the listing agents doing it are taking the path least resistance as much as doing outright cheating. They spend a ton of time negotiating deals for which the other agent represented buyer has vaporized when the lender finally gets around to answering the offers. It is quite possible the lenders have told them to get offers that stick too. I am sure there is also some cheating. Not all of it is though,maybe not even much.

As I said on the other thread dealing with the topic, look for a trend in easier access to short sale deals. Not just for crooks but market wide.There may be something behind the scenes that motivates improvement in the movement of this subset of listings.

I am not trying to change any one’s mind because I am not really sure about the details. I have seen other evidence of path of least resistance behaviors from listing agents. It’s not uncommon.

[NotCranky]

Is it fraud or the path of least resistance? I think the listing agents doing it are taking the path least resistance as much as doing outright cheating. They spend a ton of time negotiating deals for which the other agent represented buyer has vaporized when the lender finally gets around to answering the offers. It is quite possible the lenders have told them to get offers that stick too. I am sure there is also some cheating. Not all of it is though,maybe not even much.

As I said on the other thread dealing with the topic, look for a trend in easier access to short sale deals. Not just for crooks but market wide.There may be something behind the scenes that motivates improvement in the movement of this subset of listings.

I am not trying to change any one’s mind because I am not really sure about the details. I have seen other evidence of path of least resistance behaviors from listing agents. It’s not uncommon.

[jpinpb]

OK. See, I read this and that’s why I’m suspicious about Chambord.

[jpinpb]

OK. See, I read this and that’s why I’m suspicious about Chambord.

[jpinpb]

OK. See, I read this and that’s why I’m suspicious about Chambord.

[jpinpb]

OK. See, I read this and that’s why I’m suspicious about Chambord.

[Author]

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