Later that same day, the new owner -- an investment group owned by another real estate agent -- resold the home to a buyer who had been lined up before the short sale transaction went through. The final sale price: $132,500, netting the seller a cool $30,000 -- a profit that should have gone to Regions. In this latest twist on short sale fraud, scammers have found a way to rip off mortgage lenders by tens of thousands of dollars -- sometimes in a matter of hours.
The scam artists, usually real estate agents, will secure a legitimate bid on a home, one where the borrower owes far more on the mortgage than the home is worth. Then they arrange for an accomplice investor to make a lower offer on the home. The agent then presents the lower bid to the lender and asks them to forgive any remaining balance owed -- without disclosing that there was a higher bid made on the home. Once the short sale is approved, the scammer then sells the home to the higher bidder, often on the same day.
"These same-day resales are on average nearly $50,000 greater than the lender agreed upon short-sale price," said Tim Grace, senior vice president of product management and analytics at CoreLogic (CLGX), a financial analytics company based in Santa Ana, Calif. Such transactions are expected to cost lenders more than $375 million this year, up more than 20% from last year, according to CoreLogic.
The anatomy of a scam
