In their latest press release, Freddie Mac is now recognizing short sale ‘flips’ as fraudulent. As you may know, some short sale companies today find a willing short seller, submit a ‘low-ball’ offer to the bank on their behalf, have another buyer willing to pay what it’s really worth, and then utilizing a Trust or all-cash to flip the home to them once approved for a discount by the original lender. As of last month, this is now illegal. Utilizing a Trust permits them to navigate around potential seasoning issues, as it does not require Recording with the initial ‘low-ball’ acceptance. Whether you are an interested seller or RE professional, I would encourage you to read the official Freddie Mac statement about this, as this is not uncommon in other short sale operations out there today. On a side note, I’ve discouraged this behavior all along because it increases the deficiency that the original seller may be responsible for!

When companies that utilize this tactic market to a borrower/seller, they typically say things like “we will get you an immediate offer” and “we have investors that buy short sales.” When they market to RE Agents, that usually say “we’ll do all negotiating for free”, “you get to keep your entire commission and do not charge any money”, and “we’ll get you an immediate offer.” Please let me make it clear that not everyone that says these statements are fraudulent, rather they’re just potential indicators of a fraudulent operation.

While these companies and other have been chasing the quick-buck, we’ve continually stayed the course for years here at ShhortSale.com by always acting in the sellers best interest. We give each of our deals the intimate attention that it needs, and have always collected our compensation legally through what the lender pays and permits through RE commissions at closing.

Jeff Grant, President, ShhortSale.com