Banks Are Swamped With Short Sales, Sandbaggers Abound
Clearly the wreckage of the financial collapse in 2008 is still being felt. No where is that more apparent or profound than the housing market.
We should have known, right? I mean when housing prices blew up and then kept climbing, deep down we knew we just didn’t want to admit it. We just kept counting the increase of our investment with bright wide eyes.
Well that changed.
Too many unqualified buyers were given loans. We know that too. And now, in the aftermath, the desperate and fraudsters have a new vehicle, mortgage flopping.
In one case, a homeowner spread possum urine around the house and turned up the heat before showing the house.
In other cases, plumbing and electrical problems are either created or faked. Walls and ceilings are painted to fake water damage. Cupboard doors are removed, trash and dirty laundry are left laying around.
The plan is for the seller to scare legitimate buyers, and after the house sits on the market for months on end, they ask the lender to forgive the difference between the sale price and the amount owed. When the bank agrees to the short sale, the seller then brings in an accomplice who buys the undervalued property and turns it around for a profit.
Associate director of fraud investigation for Freddie Mac, Rob Hagberg said;
One flopping scam that relied on heavy repair estimates was repeated several times in the Ogden, Utah area. A group kept claiming houses had been contaminated with residue from crystal meth labs.
“It was the same cast of characters on multiple properties,” said Hagberg.
Noticing the pattern, Freddie Mac investigated and broke up the ring.
The agency solicits help from the public to bust floppers and has a toll free number to report suspicious activity — 1-800-4fraud8.