Home buyers tired of making offers on “bogus” short sales will be happy to hear that Fannie Mae and Freddie Mac regulators are putting requirements in place aimed at helping reduce short sale fraud.
Starting August 1st, Fannie Mae short sales will need to be listed as “Active” in the MLS for a minimum of 5 days before the status can be changed to “Pending.” Freddie Mac also announced similar guidelines.
How does this prevent short sale fraud, you ask? By itself it doesn’t. But it makes it a little harder for those unethical agents participating in short sale fraud, to continue doing so. You see, many times a short sale listing is entered into the Multiple Listing Service, and before I can even coordinate a showing of the property to my buyer, the listing status is changed to “Pending.” Obviously because the listing agent also had the buyer for the property.
Representing both seller and buyer in a transaction is not illegal in Florida. So that is not what constitutes short sale fraud. The fraud happens because the property isn’t really available to all possible buyers on the market. The property is only in the MLS because it is a requirement of the lender holding the mortgage. So the banks are being lied to by both the sellers and the agents. The banks think that a large pool of buyers will get them the best possible offer on the property. And it would, if it were available to be seen by all the buyers wanting to get in there. But the listing agent changes the status of the listing to Pending and buyers stop making requests to see the property. In reality, maybe not even one buyer ever sees the home because the seller already had a “straw buyer” in mind to “buy” his property. His intent all along was to keep the property, under someone else’s name, at a lower price than he paid or owes to the bank presently.
This is a pet peeve of mine. I contact countless agents trying to show homes to my buyers. A good portion of the time, on short sales, the agents NEVER get back to me. Red flag. Danger, danger, Will Robinson, short sale fraud alert!
I am delighted to hear of these new requirements. It is unfortunate that they are needed, but they may help to stop this embarrassing wave of short sale fraud being committed in today’s real estate market.
Read about the new short sale regulations by clicking on the link.