Short sale

[snopes]

Comment: Recently, our good friend Michael (a local realtor) shared his experience with Leisa and I about an "Obama supporter" he encountered while showing homes to a low income, working family in Pontiac, MI. We asked him to please write it down so we could share it with you.

As a Realtor for the past 28 years I thought I’d seen or heard it all. Until now.

I was showing homes in Pontiac, MI. one afternoon recently and showed up at a home at the 4:00 pm time my appointment was scheduled for. After I woke up the homeowner, she let us in and then proceeded to tell my buyers and I that she has already entered into a contract to sell the home on a short-sale. (A short-sale is a sale where the banks accepts less money than is owed on the home). After some chit-chat, she proceeded to tell us that she and her sister (who also lived in the area) were buying each other’s homes via the short-sale process. I mentioned to her that I thought relatives could not be involved in those transactions. She smiled and said "We have two different last names so no one knows the difference".

She went on to tell us that each of them owed over 100K on their homes and were in the process of buying each other’s homes for about 10-15K cash. To top it off, they were each receiving $3,000.00 in government provided relocation assistance at the closing.

My buyers and I were amazed that she was outright admitting to fraud and yet, she continued. She began to tell us that the best part of her scheme was that because they currently were not working that they (both) are now receiving Section 8 Vouchers. I said I thought those were for renters and she said "That’s the best part; me and my sister are going to be renting each other’s homes so we don’t even have to move, and Obama is going to give us each $800.00 a month to pay the rent!" She then picked up a picture she had framed of Obama and did a little happy dance around her living room and while she kissed the picture she was singing "Thank you Obama.... thank you Obama."

So here is the bottom line… Both of these scammers got at least $80,000.00 in debt forgiven, $3,000.00 in cash for relocation (when in fact they did not relocate) and to boot, you and I will now be paying (through our taxes) $1,600.00 in rent for each them each and every month.... perhaps forever!

And I also would not be at all surprised if they are receiving food stamps and whatever other programs are available for anyone who is willing to lie to get assistance.

These women went from working and paying about $900.00 each in mortgage payments to staying home and getting paid $800.00 each per month to live in the same home they had been living in and all they had to do was lie on a few papers. This craziness has to stop! I’m sure this kind of fraud is going on each and every day all across the country and no one wants to touch the subject of entitlements because they might OFFEND someone or lose a vote or two.

By the way ... she had an almost new SUV in the driveway, three flat screen TV's and a very nice computer set up in her living room which was furnished entirely with nice leather furniture.


'TIS THE NEW 'AMERICAN WAY'

[snopes]

I'm not sure what any of this has to do with President Obama. If two women are manipulating the short sale system to their advantage as described, it's because they're committing fraud, not because the Obama administration put some law or program in place that allowed them to do it.

And Section 8 rent housing assistance was implemented in 1937, which I'm pretty sure was before Obama took office.

[Simply Madeline]

She then picked up a picture she had framed of Obama and did a little happy dance around her living room and while she kissed the picture she was singing "Thank you Obama.... thank you Obama.

Priceless!

ETA: Getting a bank to approve a short sale in the current real estate environment is quite difficult. I am aware of a number of situations where banks have turned down multiple offers and elected to foreclose instead of accepting a short sale.

[erwins]

I don't see any bank agreeing to a short sale of $10-15k on $100k of debt. And if it did happen, it would have nothing to do with Obama or the government--just bad decision-making by the bank along with the fraud by the buyers.

[Esprise Me]

I'm also a bit dubious that a bank would agree to a short sale on the home of someone who was turning around and buying another home. I mean, surely they'd be aware of that?

[Not_Done_Living]

why would she even talk to a real estate agent if the house was already "sold" -- let alone invite them in explain thier dasterdly deed, and then maniacly dance around the room with a picture?

Although i know and work with a few people in michigan, and one person i know has a $85k mortgage debt, with a $22k assesment on his home due to other people in his neighborhood losing thier jobs and walking away from the house (and debt) all together.

He is concerned that even though he can afford the mortgage, that the bank won't renew it with the asssesment being so low (he is in Flint MI)

[Simply Madeline]

Maybe she's a Bond villain.

[GenYus234]

Also, anyone applying for rental assistance might have to undergo a search to make sure they didn't have any real estate or assets. And if they had no assets, I'd think it questionable how they could afford to buy the other's house.

[erwins]

And they're getting approved for new mortgages while unemployed. And they're going to be eligible for Section 8 assistance (plus "food stamps and and whatever other programs are available for anyone who is willing to lie to get assistance") even though the government will clearly be aware that each of them is receiving the section 8 rent payments as the landlord of each house. Somehow I doubt the government would give you rent assistance to live in a different house than the one you own and are renting out.

[snopes]

Originally Posted by Esprise Me

I'm also a bit dubious that a bank would agree to a short sale on the home of someone who was turning around and buying another home. I mean, surely they'd be aware of that?

I don't why that would necessarily be true. If the bank that held a lien on your house allowed you to short sell it, and you then went out and bought another house with cash you had kept elsewhere, how would the first bank know that? Maybe they could run a property check after the fact and find out that you had bought another home after short selling the first one, but I don't know that they could do anything about it at that point.

[snopes]

Originally Posted by erwins

And they're getting approved for new mortgages while unemployed.

The OP says they're "buying each other’s homes for about 10-15K cash," so presumably no mortgages would be involved.

[Esprise Me]

Originally Posted by snopes

I don't why that would necessarily be true. If the bank that held a lien on your house allowed you to short sell it, and you then went out and bought another house with cash you had kept elsewhere, how would the first bank know that?

I'm no expert, but I would assume the bank wants to know who the short-sale buyer is, even if they're paying the full amount in cash up front. Otherwise, the homeowner himself could borrow money elsewhere and buy his own house at a steal. I'd also assume they'd want to run some kind of credit check on said purchaser to make sure the money is legitimately theirs, for the same reason.

[snopes]

Originally Posted by Esprise Me

I'm no expert, but I would assume the bank wants to know who the short-sale buyer is, even if they're paying the full amount in cash up front.

But if you don't buy the second home until after you've short-sold the first one, then there's no way for the lienholder of the first home to prevent you from doing that.

[Beachlife!]

Originally Posted by snopes

But if you don't buy the second home until after you've short-sold the first one, then there's no way for the lienholder of the first home to prevent you from doing that.

Doesn't the OP required that it all happens at the same time though?

[erwins]

Yeah, it either has to be coordinated to happen at exactly the same time, or one of the two will wind up having two houses at once. If it were coordinated to happen at exactly the same time, there would have to be contract language to that effect, which would make what was happening pretty obvious to the bank.

[Lainie]

Originally Posted by Not_Done_Living

why would she even talk to a real estate agent if the house was already "sold" -- let alone invite them in explain thier dasterdly deed, and then maniacly dance around the room with a picture?

Because Obama supporters, in addition to being corrupt and greedy, are stupid.

[snopes]

Originally Posted by erwins

Yeah, it either has to be coordinated to happen at exactly the same time, or one of the two will wind up having two houses at once.

Given the amount of time typically involved in a transfer of title after a home sale, it's possible Sister B could buy Sister A's house and still have enough time to sell her own home to sister A before she shows up as the owner of record for Sister A's home.

[KirkMcD]

Just because you are in a contract for a short sale doesn't mean it's been approved yet.
As was mentioned, it's difficult to get one approved.
The buyer and the seller must give a full financial disclosure to the seller's bank. You can't hide assets. (well you can, but if they find out...)
Oh and the kicker, the forgiven debt is considered taxable income by the IRS.

Here are the details from Chase bank: https://www.chase.com/chf/mortgage/hrm_shortsaleinfo
Other banks are similar.

[me, no really]

Of course, if you can pull off a similar deal that involves millions, then you can become lauded members of the conservative ruling classes. Their only fault was only having enough imagination to do it on a small scale.

[Alarm]

Originally Posted by Lainie

Because Obama supporters, in addition to being corrupt and greedy, are stupid.

Smart enough to come up with a plan that bank owners and managers can not see through, too dumb to shut up in front of a real estate agent.

Maybe we should replace all the CIA and FBI with real estate agents and car salepeople? They seem to be the only ones who can find the really hard to see through scams!