Agents Should Beware Of Fraudulent Schemes

Agents should be aware of fraudulent schemes, refuse to participate, and report any questionable activity to the proper authorities.

These schemes proliferate in distressed real estate markets. The lack of sales and the high foreclosure rate in 2008 and 2009 gave perpetrators the opportunity to reinvent themselves and create new mortgage fraud methods in response to tighter lending regulations. These included:

Builder-Bailout Schemes – In these, builders offer excessive incentives to buyers, which are not disclosed on the mortgage loan documents.

Short Sale Schemes – These combine with foreclosure rescue schemes by promoters recruiting real estate agents and paying them referral fees for locating and soliciting homeowners in foreclosure. Promoters then convince the homeowner to deed their property to a false land trust controlled by the promoter who then negotiates to purchase the property via a short sale with the lender, getting the property for less than the amount owed by the owner. The real estate agent lists and sells the property for a profit to a buyer previously identified by the promoter. The lender takes the loss, the owner takes a hit on his or her credit, and the promoter walks away with the profit.

This article came from the January 2010-Vol40-3 edition of the bulletin.