More Real Estate Fraud -- Short Sales

[Retch The Grate]

Ah, I see, I didn't get it from the original article that the real estate agent was one who had a duty to the bank, it looked like they were just representing a buyer and flipping the property.

Yes, clearly if they are working for the bank, they are defrauding it.

 

[sheehs1]

the bank has a listing agent the buyers have their own agent, so the buying agent does NOT have to present all offers

Good point...and it goes back to the point I was trying to make (but you did a better job of it!) If it is a buyers agent...there is no one looking over their shoulders. These can be "deals" behind the scene that the bank is not even involved in. The bank agreed to the lower price. So in a case such as this, I don't necessarily think the bank is defrauded ...per se. Can a buyers agent take gross advantage. Absolutely. Is it unethical? In my book it is but perhaps not all think the same way.

I'm not agreeing with the practice. Just saying as another said it seems to be a slippery slope .

I agree that if it is the "listing agent"...it is fraud.

During short sales and foreclosure...there seem to also be kick backs to the original owner. In our case, on a short sale we looked at, we were told....the bank was going to pay the original owner $30K to "move" from the property. That amount was included in the banks price. The owner of the property moved from the property and stripped it a year earlier but was still going to get $30K. Still shaking my head over that one!

 

[Westernskies]

Are these the same banks that were jamming mortgages down peoples throats...

Sigh... Yep, it's all the evil banks's fault, kidnapping people off the streets and forcing them at gunpoint to sign up for loans they couldn't afford...

 

[73ss454]

Sigh... Yep, it's all the evil banks's fault, kidnapping people off the streets and forcing them at gunpoint to sign up for loans they couldn't afford...

No doubt that many of the folks getting these loans should have known better. But the banks are supposed to be the professionals and they knew only too well that at some point many of these loans would go bad. Now that the banks are getting screwed with these loans I for one don't feel sorry for them.

 

[Gatordoc50]

Sigh... Yep, it's all the evil banks's fault, kidnapping people off the streets and forcing them at gunpoint to sign up for loans they couldn't afford...

No, the guns were pointed at the taxpayers head when the banks wanted their payments from the crappy loans. Evil, Incompetent, Uncaring, Greedy. All of the above.

 

[haha]

Just to make things "even" ... my realtor also said the banks are double dipping. Collecting the 20% PMI offers then artificially holding the price of the house high ... selling at short sale for something less than 20% after foreclosure.

Might explain why prices have not adjusted enough ... 6 years n'counting.

Could you explain what you mean? I thought that 20% down offers need no PMI, and a sale by a bank after foreclosure is not a short sale, it it a sale of bank owned property.

How does the bank make money with this plan? And what are the mechanics of how it goes down?

Ha

 

[Texas Proud]

Interesting ... this has been going for years in my hood. My realtor spoke of a competitor (broker) who is using his mother and bothers as the investors. He fronts the cash for them and flips the house at a higher price after negotiating a VERY short sale.

The same game is played on ebay and craigslist with every product under the sun.

A fool and his money will soon be parted.

I think there is a difference in making the offer without someone that has made an offer to you... IOW, you are taking a risk that the house will not sell for more... it might be a minor risk, but a risk none the less...

If you have a valid offer to buy and then undercut that bid, you do not carry the same risk... and also have not been honest with the seller...

I do think an agent has a duty to provide the offer to the bank.... fiduciary or not....

 

[Darryl]

Not sure if it's state specific but around these parts the realtors fiduciary responsibility is to the seller. We can go out and sign a buyers agent agreement and shift that responsibility. If I just call a realtor go look at houses and make an offer without that agreement good ones will work on the relationship offer many services etc. but their fiduciary reponsibility is to the seller.

 

[clifp]

All I can say clifg is that while looking at property the last 3 months, some of them being foreclosures and short sales, this is what all of the real estate agents have been telling us. My husbands brother and wife....who were about to loose their house last year...told us the same thing.
Try these links for starters....

Is The FDIC Killing Short Sales?

FDIC: Loss-Share Questions and Answers

Interestingly I read that blog posting not to long ago and was annoyed. A couple of points it only applies to mortgages that were originally issued by banks that have failed, and were merged into other banks. If Wells Fargo made the mortgage and kept it on the books (not too common) they eat the any loss if the price of the house had dropped more than 20% (the Private Mortgage Insurance companies cover the first 20%)

But as the article suggest with more than 50 failed banks including many of the largest and most aggressive lenders, in many case the Bank ends up making money in short sales. Not a good system.

 

[sheehs1]

You are right clifg. I had forgotten the point that it is "if the bank had failed". Think CountryWide, Fannie, Freddie, and the point is well taken that a large percentage were probably serviced by failed banks/institutions.
One of the properties we were looking at was actually "bank owned". The lending institution that now owns the property is in bankruptcy. Used to be Thornburg..now called TMST (TMST, Inc). It was stated to us that they will receive an FDIC payment on that property.
There doesn't seem to be incentive for banks (that have failed I suppose), to move these short sales or bank owned properties quickly. In fact, we offered 77%of the current list price and the bank rejected our offer. We then offered 88% and they just "sat" on our offer for almost 2 weeks. We pulled the offer. Their offer price is 12% higher than it "should" be based on what other properties are selling for in that area.
Yes...it is annoying...and a mess.