February 23rd, 2011 at 10:29 pm
I got a call last week about a new short sale scam that was, at least, new and interesting.? ? In this transaction, shortly before listing the property for sale, the seller transferred the property into a family trust.? ? Then, after it was put on the market, an investor offered to buy the property.? ? Understanding that short sale lenders prohibit flip transactions these days, the parties came up with a new, “creative” structure.? ? Rather than buy the property in the first, short sale transaction, the buyer instead agreed to purchase the beneficial interest in the trust.? ? That way, when the bank approved the short sale and was paid off, the property would not transfer.? Instead the investor/buyer would become the beneficiary of the existing owner of the property, the trust.? ? Then, when the property was sold to the ultimate buyer who the investor had already located, title would transfer for the first time, therefore theoretically not violating the “no flip rule.”
Of course, it is very easy to see what is really going on here.? ? This is really a flip transaction, just structured in a way so as to get around the bank’s prohibition of such deals.? ? Of course, no one is telling the bank what is really going on and, as a result, we refused to be involved.? ? As we have said many times, the short sale “professionals” are very clever in their scams and keep coming up with new ones so they can stay one step ahead of the banks.? ? Regardless, it is our job to stay vigilant and stay away from fraudulent transactions such as this.? ? As always, let us know if you have any questions.
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