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Announcements 9/29/2008 |
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RSC has received inquiries from coop brokers concerning several types of “investor sales.” It is our understanding that the Colorado Division of Real Estate is studying these types of transactions. RSC legal counsel prepared the following general information concerning Short Sales: Questionable Short Sales Mortgage fraud can occur in several ways and sometimes includes the unwitting assistance of a real estate broker. Often a key element of a fraudulent scheme is the imbalance of information. One side, normally the borrower or someone working with the buyer, conceals information from or affirmatively misleads the lender. The Association has become aware of a scenario that appears to involve concealing important information from lenders. The scenario typically involves an investor/buyer negotiating a purchase contract with a seller/borrower subject to a successful short sale. The investor/buyer then negotiates a short sale with the lender. The investor/buyer simultaneously markets the property for a higher price. Once a new buyer is found, the investor conducts a simultaneous closing—pocketing the difference between the short sale price and the new purchase price. Apparently, the lender is unaware of the new contract for a higher price. In summary, simultaneous closings involving short sales and significant sales price adjustments could be a red flag. One of the most important documents for detecting fraud is the original sales agreement and any addenda to that agreement. It is also the document which the real estate agent is most likely to be involved in preparing. Therefore, care should be exercised in preserving the accuracy of the agreement. Be sure that: (i) the property is clearly indentified; (ii) all riders and addendums are attached; and (iii) there are no blanks or inconsistent information. |