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Another way to get rid of that bad loan!

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panappr

Thread Starter
Elite Member
Joined
Dec 5, 2007
Professional Status
Certified Residential Appraiser
State
California
I'm just researching a property (condo) in a large complex with tons of sales, noticing a large number of them are being sold to the same last name. In researching some of these sales, I noticed that they were all listed in the MLS as "short sales" HMMM. Subject to bank approval. HMMM. After talking to a couple of the agents, one confided in me that basically what is happening with these properties (same last name/but not in all cases) is they are being short saled to relatives to lower the loan amount and the family gets to keep the property. Is this fraud, NO, I guess if my brother wants to buy my house at the new reduced price and the bank says OK, that's his choice, its a free country. But does the bank know???
 

TJSum

Elite Member
Joined
Nov 12, 2007
Professional Status
Certified Residential Appraiser
State
Maryland
I have had several assignments so far in 2008 of short sales. The request are not for the buyer or the new lender, they are for the old lender holding the sour loan. They usually order a REO report, with all four values (as is, as repaired, liquidation as is and then liquidation as repaired) needed. Once, the report is submitted, they decide on whether to accept the short sale offer or not.

There is plenty of room for fraud in these short sales, appraisers need to be very cautious. I would think the real estate agents involved in your description are not living up to their code of ethics to say the least. I am also sure friends of these agents are trying to get "good deals" as well. Just as the appraisers job is to protect the lender by not overvaluing on typical mortgage appraisals, in this type of assignment we are to make sure they are not getting ripped off on the short sale.

From what I hear it takes forever for the lender holding the sour mortgage to sign off on these deals, so hopefully they are doing thorough research on all aspects of it during that time frame.
 
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