Possible Short Sale Fraud By The Banks
January 15, 2010
Possible Short Sale Fraud By The Banks
Short Sales in San Ramon to Short Sales in Pleasanton. If you are thinking of purchasing a short sale you need to know what the bank can and cannot ask for.
When the housing market was ‘crazy’ many homeowners pulled money out of their home in equity lines and created a 2nd loan. Roughly 12 percent of homes for sale are short sales and many have a first and this second or third loan attached to their home. For a short sale to go through, the second must give up this loan. Legally they do not have to, but if the do not allow and it goes to foreclosure and they get nothing. In order to get the sale to go through the first lien holder will give them $1,000 to $10,000 instead of nothing.
Not all sales happen this way. Since the second gets next to nothing on what they are owed, many banks are requiring the buyers and Realtors to give them money and the first lien holder knows nothing about it. This additional money does not show up on the HUD and the first never knows about it.
“They are pretty clear and pretty upfront about the fact that if the first lender knows they are getting paid, the first lender will kill the short sale,” says Jeremy Brandt. “So these second lenders are asking for the payments off the closing documents, off the HUD statement, usually in a cashiers check prior to closing. Once they receive that payment, they will allow the short sale to go through, which according to RESPA laws and the lawyers that we have spoken to on the topic is not legal.”
For more information on this visit CNBC.com
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