Short sales have more than tripled since 2008, which is leading to an increase in short-sale fraud that hurts lenders.
The number of short sales has more than tripled since 2008, which is leading to an increase in short-sale fraud that hurts lenders.
A new study estimates that short-sale fraud is causing lenders to lose out on $310 million.
Here’s how it works: A lender might secure a real estate agent to sell a property with a $150,000 mortgage. The agent receives an offer to buy the property for $120,000 but doesn’t tell the lender. Then the agent arranges for a willing “investor” to buy the house for $100,000.
After the lender sells to the investor, the real estate agent then negotiates a quick resale to the initial buyer willing to pay $120,000. The agent gets paid commission twice, and the investor makes money from the quick property “flip.”
Read more at the Portland Tribune.
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