Beware of the Short Sale Scam
Because of the large number of short sales and because they promise to remain strong for the next five years, they are the perfect playing field for unscrupulous scammers.
Unlicensed “Short Sale” negotiators are approaching homeowners in distress and asking for upfront money to negotiate with lenders. This is illegal. Only attorneys and licensed brokers can ask for money up front – and only after the Department of Real Estate approves the agreement with an individual seller.
These “so called” Short Sale negotiators, including some real estate agents are lowballing offers to overwhelmed banks. This is called “flopping.” The home is then flipped to a waiting buyer for a much higher price. Beware when you are asked to use one of these “floppers” title companies. This could be a clue you are involved in a flop.
Another practice that is happening with regularity is that often the holder of a 2nd mortgage on the property is demanding extra money outside of escrow in a “secret deal”, because they don’t want the primary lender to know. If you don’t play ball with them they will refuse to approve the sale. It is out and out blackmail and extortion. The government really needs to crack down on this practice.
Some homeowners, especially savvy, well-off owners who owe far more than their houses are worth, are hiding savings and income to persuade lenders to agree to short sales. Many can afford their mortgages, but know it will take them years to recoup their 2006 values.
If someone asks you for money to negotiate a Short Sale, you should probably look elsewhere for help. HELP IS FREE! There are many well qualified people who can help for free. Look for an agent who holds a CDPE or SFR designation. These agents have been trained to help you through the process.
From the category archives:
banks
The list of lenders participating in HAFA (Home Affordable Foreclosure Alternative) is quite extensive. Remember, participation in HAFA by the banks is voluntary. Those lenders participating in HAFA have guidelines they must adhere to, if they are to be compensated under the HAFA program for their participation.
A homeowner who meets the criteria of HAFA may participate in the HAFA program, EVEN, if they have been turned down for a modification under the HAMP (Home Affordable Modification Program) program.
A homeowner who meets the following criteria might want to find out, if their bank is a participating bank. The homeowner must qualify as follows:
1. The borrower must have a genuine hardship or an impending hardship.
2. The residence must be the borrower’s primary residence.
3. The mortgage is delinquent or will be delinquent in the foreseeable future.
4. The unpaid principal balance may not exceed $729,750.
5. The total mortgage payment must exceed 31% of the Gross monthly income of the borrower.
Because the list of lenders participating is so extensive, please send us an e-mail request to Barbara@barbaraandSusi.com or Susi@barbaraandsusi.com and we will send you the list immediately.
There is a lot of confusion between HAMPand HAFA. HAMP is the Home Affordable Modification Plan and HAMP is the Home Affordable Foreclosure Alternative program. Under one program (HAMP) you are trying to get a loan modification on your loan/s. Under the other program (HAFA) you are trying to find an alternative to a foreclosure by selling your home using the short sale process or giving your property back to the bank using a Deed in Lieu of foreclosure.
If you qualify under HAFA to sell your home and your lender is identified as subscribing to the HAFA program, you, as the borrower will be fully released from all liability for repayment of the loan.
Because, in any case, there could be significant tax and credit issues, it is always best to check with your attorney and tax advisor as to your personal situation.
