Miami Short Sale Blog

If you are one of the many homeowners facing foreclosure, Bank of America has a pilot program which may help you stay in your home.  The innovative program, which is being rolled out to a select 1,000 Bank of America customers in the states of Nevada, New York and Arizona, would turn the home owner into a tenant.

The bank will basically take over ownership of the home and allow the homeowner to stay in the home as a tenant paying market or below market rental rates for up to 3 years.  The bank would forgive the debt on the loan (which will likely mean the amount is reported as income – due diligence required!) and pay all the normal expenses attached to home ownership, such as real estate taxes, home owners insurance, maintenance, repairs, etc.

The success of this program will help Bank of America determine if they will offer it in other markets, such as our hard hit South Florida real estate market.

Miami was a prime area for mortgage fraud during the real estate boom, it is now a contender for the title of Short Sale Scam Capital.  As long as there are rules, there will be folks looking to break them.  Miami seems to draw a larger amount of these folks than most places.

Four were charged with a foreclosure/short sale scam.  They were portraying themselves as connected with Miami-Dade County officials to sell foreclosed/distressed homes even before they were listed for sale.  They stole millions of dollars from unsuspecting victims this way.

If it sounds too good to be true and you met this person at the Miccosukee, please contact a professional before you fork over your hard earned cash.

Read the whole story here.

I’m happy to follow up to my previous post with more details about the initiatives Bank of America is putting in place to make short sales easier for all.  This week I attended a broadcast hosted by CDPE devoted entirely to Bank of America’s short sale processing.  Bob Hora, SVP, Mortgage Servicing Executive at Bank of America Home Loans provided much information.  Here’s a recap of what transpired:

Continue reading →

When trying to short sell your Miami home, patience is required.  Yes, we handle the communications with the Lenders, but as with any process, there are certain steps and they all take time.

So when we receive the news that not one, but two, of our short sales have been approved, that is cause for celebration.  We always have short sale negotiations going on so it’s not unusual that two of them were approved.  But it was an extra treat receiving news at the same time for two lucky home sellers and home buyers that the lender had approved the short sales.

Four families being able to take the next step in their journey.  It’s always nice to be a part of that.

Throughout the course of business I speak to lots of consumers about the market. Whenever the topic of short sale fraud comes up, they are always surprised. Then I explain what short sale fraud is and that it’s alive and well in Miami, much to the chagrin of those of us who fight constantly to change the reputation that precedes us. It’s an uphill battle when scams affecting banks and unsuspecting consumers are still so prevalent.

So, what exactly is short sale fraud? It takes various forms. Here are a couple of the more prevalent ones in Miami:

• The selling agent may line up a buyer for the property at market value, but submit a different, lower, offer to the bank for approval.  Oftentimes this requires that others be involved in this as well, as the lender will send someone to do a BPO (Broker’s Price Opinion – similar to an appraisal but performed by an agent hired by the lender).  Once the bank approves the lower offer and the transaction closes, the property is then flipped and sold at true market value.  The seller is usually not involved in this type of scam, but can be and would then share the profits of the flip.  The loser?  The bank holding the original mortgage note who got a lot less for the home than it was really worth.
• This other form is the one that I am seeing much more often and I hesitate to say “seeing” because I have no actual proof that it is happening, just clues, many clues, that point to its existence.  This 2nd one involves the seller always.  It takes place when a seller has no intention of really selling the house.  His intention is to get out from under the “huge” debt (his original purchase price) and stay in the house at the new, lower price.  How does this happen?  The “sale” takes place to a known buyer, even though they both sign affidavits that it is an “arm’s length transaction” and neither one has anything going on with the other (can we say “perjury” boys and girls?).  The seller does not act on his own.  His real estate professional (and I use the term lightly) has to be knowingly doing this.  You see, there will be requests made by other agents who want to show the property.  The listing agent then ignores all those requests to make sure the only offer submitted to the bank is the one mentioned above.  Why even list it then?  Because it is a lender requirement.  Shady!!

So today I was looking at closed sales in an area of Miami I know really well and one stood out like a sore thumb.  A short sale that had been listed at $660K dropped the asking price to $330K in a matter of two months (red flag #1).  Immediately after cutting the price in half, it pended (accepted an offer and changed the status on the MLS to “Pending Sale”).  Three months later the transaction closed with a sales price of $250K.  This by itself is not the next red flag.  But I know this area.  This particular home is worth between $440K – $495K in today’s market.  And it sold for $250K?  Big red flag.  I’m not really sure whether it’s fraud of type A or B above, but fraud it is. 

Besides the fact that the banks are losing out on huge amounts of money, there are the homeowners in the surrounding areas who are affected as well.  The property values are affected by these bogus sales and it hurts other homesellers trying to sell their homes at bona fide market value.  With a sale such as this one being used by an appraiser, it will be difficult for legitimate home sales to appraise.

This is infuriating.  Besides that, it’s illegal.  Sigh.