Replies to This Discussion

Permalink Reply by Smitty on April 17, 2011 at 9:02am

@ Paul Francis,

Paul, Just FYI, there are PLENTY of LEGITIMATE flip investors out there and I've worked with a few.  There is NOTHING illegal about buying low and selling high IN THE SAME DAY even, so long as it was diclosed to the shorting lender. 

It's unbelieveable to me that people still have a hard time with this concept.  If it's not for you...I get it, don't participate but these aren't "schemes" Many are legitmate investors who do this for a living.  The biggest way to tell if it's LEGIT is make sure it's diclosed in the purchase contract.  If it's not, then you can run for the hills.

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Permalink Reply by Rain Silverhawk on April 17, 2011 at 9:04am

Well I have my doubts about the whole FBI involvement anyway.  I have an actual fraud case going on right now where a Canadian sent in a fake $350,000 check appearing to be from Intact insurance for a $220,000 offer price to the attorney.  The attorney told me that she is trying getting the FBI involved with these type cases and they won't do it for such a small amount.  Last time I checked 350k was not really pocket change to most of us.  If they won't do it for 350k they aren't going to be chasing down agents presenting offers to an entity that is not even their client.

LIZA DIGALIZIA said:

Most the replies here are correct.

The seller choses one offer, the one he likes best. It does not have to be the highest and best, BUT the one he likes the best. Then, we as his representative send it to the bank. If the bank does his calculations, etc, and says not enough then we resubmit another offer.

I have been taught that the seller is the one who signs the offer and is STILL the owner of the property.

I don't see how the FBI would get their hands in the pie, maybe there is another motive.. Fraud?

I don't seee how..or why ...

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Permalink Reply by Alyce Nelson on April 17, 2011 at 10:49am

Yes, this has been making the rounds for awhile.  The author has yet to produce credible sources demonstrating this came from the FBI.  I went to the FBI website and could find nothing.  For something this hot it would be findable there.   I would think before the General Counsel for the Department of Real Estate for Rhode Island would get behind this s/he would call the FBI directly and get it from the source.  However, this post is from the Board of Realtors, and not even from their counsel.  Until there are credible references, it would seem this is just hearsay.  Why would the FBI communicate only with Rhode Island and not the rest of the states, commonwealths, and territories?  This just doesn’t seem to add up…

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Permalink Reply by Raymond Kennedy on April 17, 2011 at 6:24pm

Smitty,

The key word here being disclose. What they would be looking for if they are looking would be flips that are undisclosed to the lien holders. They are considering this a form of mortgage fraud. Of course as you stated, if the flip was fully disclosed to the lien holder in writing and they still agreed to close it, well there is no wrong doing or at least the liability on your end would be pretty much eliminated at that point.

I would be curious on how this is being disclosed. I would almost for my own piece of mind make sure there is a separate disclosure outside the purchase contract since the lien holder is not party to the purchase agreement. Some lenders have their own addendums that clearly state this is not acceptable. I guess it all depends on how it is written up and negotiated but the keyword there is disclosure.

 

If you appear or your client appears before a judge one day, they would just need a very clear and written black and white statement showing the lender knew about the flip and the terms of the flip. If they don't sign anything in regards to this, it maybe hard to prove they knew it. Not something I would want the burden of proving unless it was clearly agreed to in writing.

Smitty said:

@ Paul Francis,

Paul, Just FYI, there are PLENTY of LEGITIMATE flip investors out there and I've worked with a few.  There is NOTHING illegal about buying low and selling high IN THE SAME DAY even, so long as it was diclosed to the shorting lender. 

It's unbelieveable to me that people still have a hard time with this concept.  If it's not for you...I get it, don't participate but these aren't "schemes" Many are legitmate investors who do this for a living.  The biggest way to tell if it's LEGIT is make sure it's diclosed in the purchase contract.  If it's not, then you can run for the hills.

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Permalink Reply by Paul Francis - Vegas Short Sales on April 17, 2011 at 9:45pm

 

@ Smitty,

 

FYI -- Nowhere in my comment for the example I provide states I think it's illegal, illegitimate or whatever.

 

All I did was provide an example of what is being discussed in the Bankster circles as Fraud ....  which is much more then just not "Submitting All Offers" ... something the person who wrote up the original article fails to properly discuss AKA tell the whole story in my opinion.

 

Just FYI, there are PLENTY of LEGITIMATE flip investors out there and I've worked with a few.  There is NOTHING illegal about buying low and selling high IN THE SAME DAY even, so long as it was diclosed to the shorting lender.

 

Obviously if it's disclosed to the lienholder and they sign off on it then that's their choice / right as far as I'm concerned. And as far as I'm concerned, it's up to the lienholder to do their own due diligence to determine what price they will approve.... or not approve in the first place. I don't know about anybody else... but every short sale I've done in the past three years the servicer / lienholder did their own independent BPO or Appraisal.

 

But that's not what I was suggesting in my original comment anyways...

There are unscrupulous services out there that will accept and submit offers for their "investor" clients.... while rejecting higher offers from clients represented by somebody else --- or not even putting the properties up on the market to try to obtain the highest and best offer in the first place... just to try to get their "investor" clients screaming deals.

 

In my opinion.... that's what the Fraud Topic is really all about when it comes to the FBI... Not the claim by the original author of the article being discussed that it's Fraud "if you don't submit all offers" to the lienholder.

 

Personally, I don't think the FBI is going to give a Rats arse if you don't submit the $100K offer from the get rich quick kids when you already had your sellers accept the $200K offer and submitted that one to the lienholder for short sale approval.

 

However... if somebody makes a legitimate $250K offer while you are waiting for the $200K offer to be approved... well....who knows. Happy debating I suppose...

 

While we know how the short sale process really work and what's involved .... I don't know many bureaucrats that do. (Which is obvious considering where we are today four years after the fiasco started.)

 

Regardless.... for anybody that wants more of an understanding of where all of this "fraud" noise is coming from:

 

Short Sale Fraud Monitoring Solution

 

Pay attention to the phrases:

 

"The service also has the ability to identify the entity or entities perpetrating the potential fraud."

 

and

 

It also alerts the new lender that it could be party to fraud discovered in the dual transactions.

 

Which is basically stating that it's looking for what I discussed above... This is obviously a company selling a service and they are making their case for lender's to subscribe to their service.

 

Illegal, fraud or whatever. I Never commented whether it was illegal or not and it's not for me to decide...

 

Hard time with the concept? Hardly....

 

As far as I'm concerned... it's up to the investors that actually own the loan to do their own due diligence ... especially as long as they keep using Servicers that act like debt collectors.

 

Smitty said:

@ Paul Francis,

Paul, Just FYI, there are PLENTY of LEGITIMATE flip investors out there and I've worked with a few.  There is NOTHING illegal about buying low and selling high IN THE SAME DAY even, so long as it was diclosed to the shorting lender. 

It's unbelieveable to me that people still have a hard time with this concept.  If it's not for you...I get it, don't participate but these aren't "schemes" Many are legitmate investors who do this for a living.  The biggest way to tell if it's LEGIT is make sure it's diclosed in the purchase contract.  If it's not, then you can run for the hills.

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Permalink Reply by Smitty on April 18, 2011 at 3:07am

Ray,

No lender is going to give you a written letter on top of the approval letter that they agreed to a flip.  Like they dont' have enough paperwork....Seriously...how far does it have to go? If the disclosure is the purchase contract and they can't read that disclosure and do their due diligence it's on THEM to prove it wasn't disclosed. I've read and seen many P&S's from flip investors and many times it's disclosed, bolded, and in the first or second paragraph in the purchase contract.  Even if it's not disclosed like that, as long as it's in the contract it's on the lender to prove they didn't know....not the flip investor.

Paul,
"There are unscrupulous services out there that will accept and submit offers for their "investor" clients.... while rejecting higher offers from clients represented by somebody else --- or not even putting the properties up on the market to try to obtain the highest and best offer in the first place... just to try to get their "investor" clients screaming deals."

Please explain this. What SERVICES are you referring to?  To my knowledge, only a homeowner can accept an offer or reject an offer.  If they accept an investor offer of $200,000 and then someone submits an offer of $250,000 (which seems like a HUGE difference) where is the fraud?  scheme?  Is this NOT the same thing the long island board of Realtors speaks of that we all disagree with? It's not fraud if someone comes in after the fact and makes a higher offer...you're working the first offfer and until or if it's rejected, you don't have to PRESENT the second offer to the lender.

I also don't understand how someone can even GET a high offer if they aren't MARKETING IT?!?!  So am I to assume that the house isn't on the MLS and yet the listing agent is getting high offers?  You're not making sense.  Either the house is on the market trying to get a good price or it's off the market and likely got a lower investor offer.  NEITHER method is fraudulent or a scheme.

I agree with you however...Corelogic is a company PAID by the lenders.  They get their bread and butter paid by bank of america, wells fargo, fannie, freddie, etc.  So they have a bit of bias in this.

"As far as I'm concerned... it's up to the investors that actually own the loan to do their own due diligence ... especially as long as they keep using Servicers that act like debt collectors."

Agreed!!!!

 

 

 

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Permalink Reply by cat gellatly on April 18, 2011 at 5:32am

That's absurd. Most lenders will not allow you to send in more than one contract. I have told lenders on occasion (SunTrust & Wells Fargo) that I have another contract that is $5,000 more than the one we sent in. Response. "We can only negotiate one short sale at a time, we are not a party to the contract it is up to the Seller to make that determination before they submit the contract to us for approval." I like that answer and I am sticking to it!

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Permalink Reply by Raymond Kennedy on April 18, 2011 at 5:58am

Smitty,

I am not saying the way you are handling it is wrong or will constitute fraud. I don't know how the disclosure is provided in the contract so it would be hard to say my comfort level with it. The question arises when and if it goes before a judge if it would be considered a clean enough disclosure. The claim that they are not party to the purchase agreement might be enough for them to make a case. This might be over thinking the situation a bit but when you have to lay down a huge deductible with the E&O attorney even before they review the case I would want to cover my tail as much as I can. Your are partially correct in stating that many of the lenders would not sign the additional disclosure especially the big banks such as BOA/BAC, Wells Chase etc but there are some that would sign additional documents depending on how you negotiate this. There are other way to disclose without their signature as well. I am sure you covered your basis with the attorneys but again, how much is documented to protect your tail. When lawsuits follow it is usually a shotgun effect and all parties associated with the file will get hit. You can bet that attorney will be watching their tail, not yours.

 

Probably overly cautious on my end but that is simply because I haven't ran into this situation on my files. Most of my files attract your typical homeowner, not investors so the lien holders based off their analysis of the property would be very unlikely to accept a Short Sale flip. 

 

If it works for you, great!

Smitty said:

Ray,

No lender is going to give you a written letter on top of the approval letter that they agreed to a flip.  Like they dont' have enough paperwork....Seriously...how far does it have to go? If the disclosure is the purchase contract and they can't read that disclosure and do their due diligence it's on THEM to prove it wasn't disclosed. I've read and seen many P&S's from flip investors and many times it's disclosed, bolded, and in the first or second paragraph in the purchase contract.  Even if it's not disclosed like that, as long as it's in the contract it's on the lender to prove they didn't know....not the flip investor.

Paul,
"There are unscrupulous services out there that will accept and submit offers for their "investor" clients.... while rejecting higher offers from clients represented by somebody else --- or not even putting the properties up on the market to try to obtain the highest and best offer in the first place... just to try to get their "investor" clients screaming deals."

Please explain this. What SERVICES are you referring to?  To my knowledge, only a homeowner can accept an offer or reject an offer.  If they accept an investor offer of $200,000 and then someone submits an offer of $250,000 (which seems like a HUGE difference) where is the fraud?  scheme?  Is this NOT the same thing the long island board of Realtors speaks of that we all disagree with? It's not fraud if someone comes in after the fact and makes a higher offer...you're working the first offfer and until or if it's rejected, you don't have to PRESENT the second offer to the lender.

I also don't understand how someone can even GET a high offer if they aren't MARKETING IT?!?!  So am I to assume that the house isn't on the MLS and yet the listing agent is getting high offers?  You're not making sense.  Either the house is on the market trying to get a good price or it's off the market and likely got a lower investor offer.  NEITHER method is fraudulent or a scheme.

I agree with you however...Corelogic is a company PAID by the lenders.  They get their bread and butter paid by bank of america, wells fargo, fannie, freddie, etc.  So they have a bit of bias in this.

"As far as I'm concerned... it's up to the investors that actually own the loan to do their own due diligence ... especially as long as they keep using Servicers that act like debt collectors."

Agreed!!!!

 

 

 

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Permalink Reply by Marivel Costanza on May 8, 2011 at 1:06pm

 

 

In my experience and after asking several negotiators, most lender's only want to see one offer.  

 

In the short sales that I handle, all offers are presented to the seller.  The seller selects the best offer, accepts it and submits it to the lender for approval.  He can only accept one offer at a time or he would be promissing  to sell a house to many buyers, which doesn't make any sense.  For example:  Equator only allows you to upload one offer at a time for short sale approval and it most be a fully executed contract.

In my opinion, it's the seller's house, seller should decide who gets it.  It's our job to represent our clients to the best of our abilities and that includes explaining which offer is the strongest offer in a multiple offer situation.

 

Disclose, disclose, disclose and you will never have to worry about the FBI or any other agency.

 

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Permalink Reply by Jill Slyter on May 9, 2011 at 5:54am

The FBI should be looking at all the lenders who do nothing but sit on offers.

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Permalink Reply by Wilma Hebrank on September 12, 2011 at 7:14am

I second that!

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Permalink Reply by William F Griffin Jr on September 13, 2011 at 9:44am

In 2006 I had sent  multiple offers to CountryWide.  The seller was an attorney and refused to sign any offer and instructed me to forward them to the lender which is what was done.  The PMI company called and asked if we had any offers.  They were told by the lender that no offers had been submitted at all. The PMI co contacted the lender and they suddenly located the offers. 

 

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