Yesterday we received a nervous call from someone who left the following message:
“Hi. My name is X. I am here in X, Colorado. I have been reading your blog and saw your post about mortgage fraud, titled: Colorado Springs Short Sale Scam is Mortgage Fraud. I am about to buy a house, and I need you to contact me right away. My number is X. Thanks.”
We call her back right away and ask what she wants to know. She proceeds to tell us that she is about to buy a house from an investor who is in the process of buying the house from a distressed home owner who is facing foreclosure. The investor has negotiated a short sale with the bank, for $X and is planning a simultaneous close where the investor is turning around and selling the home to another buyer (the person who called us), for $Y – a price significantly higher than $X.
We explained why this was mortgage fraud – which she totally understood. From there we recommended that she talk to an attorney AND talk to the local FBI.
Why is this Mortgage Fraud?
First, we must understand what VALUE is: Value is what a ready, willing and able buyer is willing to pay for a home. In this situation, a ready, willing and able buyer was willing to pay $Y.
This Short Sale Scam is mortgage fraud because the “investor” lied to the bank by convincing them that the market value was only $X, when it was actually valued at what the final buyer was willing and able to pay: $Y.
Mortgage fraud is punishable by possible jail time AND massive fines to everyone involved. Mortgage fraud is a FEDERAL CRIME.
At the end of our conversation, the potential home buyer had decided to NOT proceed with the deal, and have a little conversation with the mortgage fraud department of the local FBI regarding this situation.
In situations like these, ignorance is NOT bliss, and I am thankful that MY BLOG educated someone and helped them NOT break the law.