Short Sale SellersShort Sale Negotiation
1. Submitting “Ghost” Offers
(Trying to obtain a Short Sale approval before there is a committed Buyer)
One of the leading cause of chaos within a Lender’s Short Sale Process is the amount of offers that are presented with false buyer information. Agents who want the listing sold quickly will sometimes do this with their intention of bringing the offer up to speed so that the short sale approval is near the end of when the actual buyer makes an offer.
This is a fraudulent act if the initial “buyer” on the offer is not an actual person. Acts like this clog up the lender pipelines.
2. Fraudulent Bankruptcy
(Using an existing bankruptcy case to stop a pending foreclosure sale)
Sellers are often approached by companies or individuals who claim that for a fee and a transfer of the seller’s title, a foreclosure sale can be stopped or postponed. This concept is a scheme . It’s a highly fraudulent act.
3. Rent Skimming
(Accepting rental income on a property in foreclosure)
Many times a seller will continue accepting rental payments from either existing tenants or from potential buyers they have already allowed to move in while the offer is being reviewed by the lender. In the meantime, the seller stops making the monthly mortgage payments and keeps all the rental income. This is a serious offense and could position the seller to have a more difficult time getting the property sold w/o deficiency judgments or unsecured notes.
4. Purchase/Lease-Option
(Selling the property at a discount to a buyer who plans to sell the property back to the seller at a furture time)
For sellers who wish to stay in their home, but cannot afford to catch up to their mortgage payments, an attractive option that investors and family members might present to the seller is to sell the property, then lease it back from the buyer with an option to re-purchase at a later time.
If the short sale were to close successfully with this scenario, and the seller ended up buying back the property, after having been forgiven for the previous mortgage debt, the original lender could pursue legal action against the seller for intentional fraud.