Short Sale Scam in Jacksonville Florida
I recently came upon a short sale listing in Jacksonville, that had expired from the Multiple Listing Service. For people unaware of what an expired listing is, it means the listing contract with that broker expired and is no longer valid. Now, I see a bunch of expired listings in the MLS everyday, but this one caught my eye due to the reference of a document, explaining how that particular short sale transaction worked. I checked it out and red flags began to wave.
The short version is this: The investor will buy the property from the seller and negotiate the short sale with the bank, then re-sell it to the buyer or if the investor does not buy it, they will allow the buyer to buy it and the buyer pays the investor a fee.
Sounds innocent enough. The agent is disclosing it in the MLS. The fee to the investor is going to be put in the HUD. The investor will record an affidavit, showing their interest in the property.
Here’s the issue or should I say, issues. The investor wants to make money. There is nothing wrong with that at all. The issue the bank is going to have, you know the seller’s lender who is being asked to take a loss, is the investor will sell it at a higher price to that buyer instead of the lender getting the higher amount. In a normal sale where the lender is getting full payoff, it’s not a big deal. In the situation of a short sale, it is a big deal and the lenders are pursuing it as fraud. In fact, in Jacksonville the FBI have been investigating it. Guess who can get sued for fraud? The investor, the listing agent and the seller. Shoot, maybe even the title company or attorney handling this transaction could get sued for fraud too. I’m not sure on that one.
Can you blame the lender really? They are owed 200k, the investor is buying it for, let’s say 100k and the buyer buying it from the investor is buying it for 150k. (I just made those numbers up), that’s 50k more that the lender could have gotten.
The second part of the equation is charging the buyer a fee, if the buyer buys it straight from the seller, instead of the investor. Well, that’s practicing real estate without a license, EXCEPT for the fact that they have an equitable interest in the property, that allows them to be able to be paid a fee and negotiate the short sale.
Now that brings up a situation involving the seller signing their deed over to an investor, and not realizing the house is no longer theirs, but the mortgage still is. They think the nice investor solved their foreclosure problems, but instead have created more.
I won’t get involved with those situations and as my client, I would never ask you to get involved either. I always use a reputable and honest closing attorney, if you don’t already have an established relationship with one. During the short sale process, I handle all the details for you, but at any time, you can call and talk to your mortgage company to discuss the process with them. I will never sway you to not be in communications with your bank.
I currently service short sales in Jacksonville, Fleming Island, Orange Park and the surrounding Northeast Florida Area. Call me at 904-910-3516 to discuss your situation and find the best solution to help you avoid foreclosure, while avoiding a Short sale Scam in Jacksonville Florida.