Welcome
Welcome To The Site!
FEATURED ARTICLE:
Facing foreclosure? Beware short sale Scams!
As more HAMP loan modifications are getting declined, homeowners are getting increasingly more desperate to keep their homes. For many homeowners, short sales are becoming a great way for them to move forward with their financial recovery without the difficulties associated with foreclosure or bankruptcy. Unfortunately as this new component of the real estate market becomes more and more prevalent, short sale frauds are popping up all over the internet, radio and television. These unethical short sale companies are capitalizing on struggling homeowner’s deep attachment to their homes to make huge profits with no regard for the financial well being of those they are supposed to be helping. What these companies are trying to accomplish is to purchase homes from desperate borrowers at deeply discounted prices and sell them back to the former homeowner at magnificent profit with a payment that is more affordable for them.
A homeowner, usually, contacts these groups thinking that they are going to be receiving short sale counseling or foreclosure advice. They are then informed about the advantages of a short sale vs. foreclosure, and given directions on how to move forward with performing a short sale with the company’s “assistance”. The company representative then produces a set of documents for the beleaguered homeowner to sign with a list of financial documentation to submit to the borrower’s lender to get started negotiating the transaction. Unlike the papers that a licensed and ethical Realtor would give a homeowner, these contracts specifically state that the company is operating in their best interest and have no duties of honest and forthright dealing with the borrower. Furthermore, their goal is to purchase the home for well below market value, and not to get the homeowner out of the financial difficulties with which they are currently struggling. After a negotiation process that lasts far longer than the industry norms (Primarily, because the property is not being acquired at fair market value!), the home is sold back to a homeowner at a payment that they are more able to afford.
After their loan modification is declined, a homeowner is a prime candidate for this kind of fraudulent short sale company. Many borrowers focus more on the monthly payment than they do the actual amount they are committing to repay. Many families will do anything to keep their home, and will modify their loan for an amount that may even be double the current value of their home. This kind of desperation is exactly the kind of thing that these companies want to see. They can get a homeowner to sell their home at a discount and sell it back to them at way above market value without having to obtain an appraisal validating the purchase price. Having reviewed the homeowner’s financial package, the company has fully underwritten the loan package and is familiar with the ability to pay, thereby protecting their investment. If a borrower defaults on the loan, the company just forecloses like any other lender, sells the home at a relatively small profit (Because they were able to purchase the home for significantly below market value), and writes off the massive loss against current or future profits.
This is just one of several different foreclosure assistance and short sale scams floating around the marketplace ready to trap the unwary and desperate homeowner. With that in mind, it becomes even more important for struggling homeowners to seek the ethical and honest representation of a licensed Realtor (Preferably one educated and certified in dealing with distressed borrowers) to make sure that the guidance they are receiving is the right advice for their unique situation. Unlike these short sale scams, the papers that a Realtor presents to a homeowner contain specific language establishing a fiduciary agency relationship. That means that the homeowner can trust that the advice they are receiving comes from an informed and trusted source with a vested interest in the homeowner’s future financial well-being. Realtors are educated and trained in all facets of real estate and can help determine if a short sale is the right solution for a borrower’s difficulties, and can make referrals to the right tax or legal professional if the situation warrants.
Short sale scams are everywhere. Don’t become a statistic! These short sale assistance companies are nothing more than wolves in sheep’s clothing trying to take advantage of your financial difficulties for their own financial gain. Make sure to thoroughly examine the track record and licenses of any companies offering to assist you with your mortgage troubles. Even something so simple as performing a Google search for the company and adding the word “scam” can give you startling insights into whether or not you should look for alternative resources. For most Americans, their home represents the largest investment that they make in their lifetime. Foreclosures, bankruptcy and short sales have serious long-term impact on an individual’s financial future. It is absolutely pertinent that homeowners seek competent representation to make sure that their situation doesn’t go from bad to worse! Consulting with an honest and informed professional can make all the difference.
About the Author
Jeremy Colonna is a licensed California real estate broker, a Certified Short Sale and Foreclosure Resource (SFR), HAFA Short Sale Specialist (CHS) and noted radio personality. Click here to listen to Jeremy’s latest radio commercial! He is co-owner of Colonna & Company Realty and specializes in distressed properties throughout Southern California. He lives in Long Beach with his wife, Heather, and their three children, Madeline, Sydney and Dominic.
