Just like any other transactions, Short Sales are prone to abuse and fraud. In this posting we will cover Upfront Fees and why they are considered illegal since the home owners could be influenced to consider Short Sales where they might have other options to avoid foreclosures.
In this type of scam, the scammers offers to negotiate with the short sale lender or perform other short sale services in exchange for an upfront fee. This was the case with Loan Modifications where upfront fees were collected from Home Owners but no work was performed. And like Loan Modification where collection of upfront fees have become illegal, Short Sale negotiators can NOT charge upfront fees either.
In these kind of scams, no work or service is actually performed. Part of the reason is that the Home Owners can easily perform the same identical task. The victim ends up not only losing the money, but often loses valuable time to make other short sale arrangements before foreclosure.
To dupe unsuspecting victims out of their money, scam artist usually knows exactly what to offer, how to pitch the offer, and what twists to add to lend credibility to the scheme. For example, these con-artists would pose Short Sale Negotiator may guarantee a short sale lender’s approval in two weeks, which may be precisely what a homeowner facing foreclosure wants to hear. To bolster the claim, they may explain that, as a relative of the loan officer or loss mitigation the negotiator has special access to an inside track at the bank. These claims are all bogus since it’s illegal since the Banks’ Short Sale Negotiators are barred from working on their relatives Short Sale applications.
To avoid being a victim of these kind of scams, we advise you to check the credential of your Real Estate Broker/Agent with your State agency where they are licensed. Make certain the Broker/Agent you choose is not subject to any disciplinary action. You should also contact the Department of Housing and Urban Development (HUD) Home Owners Help line where they can assign you a Counselor to identify your options to avoid foreclosure.