By Jennifer Harmon
January 20, 2010
The rise in residential foreclosures around the country has led to a similar increase in short-sale fraud transactions that has particularly serious implications for mortgage lenders.
"What we're seeing are situations where individuals are unlawfully taking advantage of homeowners and their lenders by engaging in short-sale fraud. The most common scenario is where these individuals secure two appraisals on a property that is about to go into foreclosure, one lower and one higher," says Chris Thorsen, a partner and financial services industry litigator with Bradley Arant Boult Cummings LLP in Nashville, Tenn.
"They then use the lower appraisal to buy the property from the mortgage company holding the loan, and the higher appraisal to sell the property on to another buyer. They pocket the difference, which can be as much as several hundred thousand dollars, depending on the property," says Mr. Thorsen.
Mortgage lenders who have fallen victim to short-sale fraud face an expensive battle in court to recover funds Read the full article here
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