FBI Report Details Short Sale Scam
By Andy Miofsky, Illinois Consumer Law Attorney on Oct 2, 2009 in Crime, Mortgage Issues
The official FBI.gov website contains a 2007 study on mortgage fraud schemes. The FBI explains how a perpetrator conspires with a property buyer to commit short sale fraud.
The perpetrator of this scheme finds a buyer for a piece of property. The buyer obtains a 100 per cent loan, and if possible attempts to borrow extra for repair and remodeling. The buyer/borrower does not perform the improvement, and instead gives the money to the original perpetrator.
Next, the buy/borrower does not make any mortgage payments, sending the loan into default status. The buyer/borrower informs the bank that the original perpetrator is interested in buying the property through a short sale.
What is a short sale? A short sale involves the bank agreeing to forgive a protion or all of its debt in order to consummate a sale on property of declining value.
Bank prefers to sell the property short rather than incur the costs of foreclosure, not knowing the buyer/borrower intended to send the mortgage loan in default.
Perpetrator buys the property free of the bank lien for less than is owed against the property and by using part of the money lent by the bank.
Related posts:
Sorry, comments for this entry are closed at this time.