Undisclosed Short Sale Payments May Be Illegal

By
Real Estate Agent with Berkshire Hathaway HomeServices California Properties BRE #01856708

 

Red Flag

Important information provided by the California Association of Realtors

Undisclosed Short Sale Payments May Be Illegal

"Undisclosed payments in short sale transactions, especially those paid outside of escrow, may violate the law, including RESPA, laws against loan fraud, and licensing laws.  Short sale agents have increasingly reported to C.A.R. about requests for agents and their clients to pay junior lien-holders and others, oftentimes outside of escrow.

One common scenario is when a short sale seller's senior lender authorizes a payment of $3,000, for example, to extinguish a junior lien, but the junior lender demands that the buyer pays an additional $9,000 outside of escrow.  Not only would it be risky for a buyer to pay outside of escrow, but concealing this additional payment from a federally-insured senior lender may constitute loan fraud, which is a crime punishable by 30 years imprisonment plus a $1 million fine (18 U.S.C. section 1014).  Furthermore, omitting from the HUD-1 Statement any charges paid at settlement by either a buyer or seller may violate the Real Estate Settlement Procedures Act (RESPA) (Appendix A to 24 C.F.R. Part 3500).  Depending on the specific circumstances, carrying out these payment requests may also violate other laws and regulations, and an agent's participation in the scheme may be subject to license revocation by the Department of Real Estate or other disciplinary action."

Agents and their clients are encouraged to file any complaints regarding fraudulent activities to the proper authorities, including the following agencies:

Attorney General's Office

California Department of Justice

Telephone: 800-952-5225

http://ag.ca.gov/consumers/mailform.htm

 

Department of Housing and Urban Development (HUD)

HUD Office of Inspector General Hotline (GFI)

Telephone: 800-347-3735

http://www.hud.gov/offices/oig/hotline

 

Federal Bureau of Investigation (FBI)

Telephone: 202-324-3000

https://tips.fbi.gov

 

 

Huntington Beach Pier

SHORT SALE HELP IN HUNTINGTON BEACH

                                 Help By A Certified Distressed Property Expert CDPE Logo

 

 

 

Posted by

 Dori Kay, REALTOR®

Prudential California Realty

 CA DRE Salesperson License  #01856708    Office License #01208606

LinkedIn Button

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
ActiveRain Community
Location:
California Orange County Huntington Beach
Groups:
Consumer Foreclosure Help
Foreclosure Help and Prevention
Foreclosures
Short Sale Specialists & Pre-Foreclosure Education
Short Sales Pre Foreclosures Bankruptcy and More!
Tags:
short sale
avoid foreclosure
options to avoid foreclosure
huntington beach
certified distressed property expert

Anonymous
Post a Comment
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the computer to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the man to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Show All Comments
Ambassador
1,091,473
Joni Staples
Berkshire Hathaway Home Services - Anderson Properties - Huntsville, TX
Your Huntsville / Lake Livingston Area REALTOR®
Wow! That is crazy! I am glad that you put the word out to warn The public. Agents should know better, but the consumer may not realize, until it is brought to their attention, that this is illegal. Great post!!
November 05, 2012 04:10 AM #1
Rainmaker
973,783
Sharon Alters
Coldwell Banker Vanguard Realty - Fleming Island, FL
Your Fleming Island Relocation Agents.

Anything not on the HUD in a short sale or any transaction involving borrowed funds from a bank is illegal - that is real estate 101.

Sharon

November 05, 2012 06:42 AM #2
Rainer
123,538
Dori Kay
Berkshire Hathaway HomeServices California Properties - Huntington Beach, CA
Orange County, CA Realtor®

Joni - What's crazy is getting a response from a post I submitted over 2 1/2 years ago....but thank you for the kind words.

Sharon -  You are right...RE 101.  Unfortunately, some missed the course.....or just lack morals.

 

November 05, 2012 08:49 AM #3
Ambassador
1,270,854
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale - Probate Specialist

Dori,  I had such a demand from the buyer's lender about 2 years ago. I asked her if she was aware that what she was asking me to do was illegal.  She said nothing.  She knew the critical situation we were in. If we did not close on that transaction the property would go to foreclosure.  And it did. I offered to pay upfront on the HUD the $6,000 she demanded. They did not want it on the HUD they wanted it under the table. NO DEAL.  I explained to the sellers who understood and did not want me to pay the random even if it was disclosed. 

November 11, 2012 09:29 AM #4
Rainer
123,538
Dori Kay
Berkshire Hathaway HomeServices California Properties - Huntington Beach, CA
Orange County, CA Realtor®

Kathleen - That is really sad. Makes you wonder where that $6,000 might have been going to.  Good thing is you are able to sleep at night, and a big shout out to your sellers for their understanding and support.  Hopefully they will be contacting you soon for a new purchase! 

November 11, 2012 11:16 AM #5
Anonymous
Anonymous
pzkmenBJ
mens toms shoes toms shoes outlet online - blue toms 鈥 made well
August 19, 2013 09:10 AM #17
Anonymous
Anonymous
fzlqghGE
toms shoes on clearance buy toms online - where do you buy toms shoes of all matters
August 19, 2013 02:42 PM #18
Anonymous
Anonymous
bhctppWH
cheap toms shoes for women toms clearance - toms shoes online a business are
August 19, 2013 08:37 PM #19
Anonymous
Anonymous
wgqkbdAO
buy toms shoes online buy cheap toms shoes - wholesale toms shoes after well City
August 20, 2013 04:47 AM #20
Anonymous
Anonymous
sbgdgmEL
toms outlet shoes toms sale - discount toms womens shoes sale for output also
August 20, 2013 10:23 AM #21
Anonymous
Anonymous
lbogixCN
wholesale toms shoes blue toms - toms on sale on in and
August 20, 2013 05:11 PM #22
Anonymous
Anonymous
sasmkaUX
toms sale toms outlet - toms shoes free shipping are million) are
August 21, 2013 02:10 AM #23
Anonymous
Anonymous
jwommfKE
toms shoes discounted sale on toms shoes - wholesale toms a being try
August 21, 2013 08:23 AM #24
Anonymous
Anonymous
qqwrciVR
toms shoes wholesale order toms shoes online - free shipping on toms shoes that attribute IBM
August 21, 2013 03:35 PM #25
Anonymous
Post a Comment
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the balloons to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Show All Comments
Rainer
123,538

Dori Kay

Orange County, CA Realtor®
What city/area can I help you with?
*
*
*
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the music-note to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Additional Information