March 19, 2010

A Short Sale Scam? … Homeowners Beware

My phone rang recently and the caller explained he was searching for a loan officer who could arrange financing for two short sales he was negotiating in Southern California. He went on to explain his company helps at-risk homeowners in several states negotiate short sales with their mortgage servicers by bringing pre-approved buyers to the table. Homeowners apparently agree to quick claim title to their home and give limited power of attorney in exchange for this company negotiating a successful short sale. Using a dual escrow, the company buys the home and immediately sells it to the waiting buyer - at a profit. Timing is everything after all because he has no “skin in the game” only profits at the

Hum … is this legit was one of the many questions going through my mind. So what do you need me for, I asked? Well … he’s shopping for a loan officer who can line up lenders willing to fund these loans. And of course, there are plenty of deals available so it would be quite lucrative.

Sound fishy yet?

Just for giggles, I asked one of my lenders if they would approve a loan like this. The answer was a flat NO! The buyer/investor would not be allowed to make a profit without having some risk. In other words, they would have put money into deal before flipping it.

So is this the next scam? Tell me what you think.