Big Banks Accused of Short Sale Fraud - CNBC

In this article CNBC discusses how big banks ask agents and borrowers to commit fraud by not informing the 1st lien holder of payments being made to the 2nd lien holder outside of escrow.  Here's the link to the article: Big Banks Accused of Short Sale Fraud - CNBC

I personal experienced this twice. Once with National City as the 2nd lien holder. The bank representative (Sharon) suggested that either I or the borrower wire money to them a day prior to close and they would "ok " the transaction. I asked her, wouldn’t it be fraud if it wasn’t on the HUD-1, she said it was legal and thta they did this all the time.

I told if she could get her corporate attorney to write a letter saying it’s legal, we’d consider it. Never got the letter. The seller and I agreed to not participate and let the 1st lien holder foreclose on the property.

The second time I experienced this was was on a short sale with Wells Fargo as the servicer for both the 1st and 2nd loans. Again the 2nd asked me to pay them something outside of escrow. I said, that would be illegal, give me another option. Eventually in this one, I got both negotiators to have a conference call and we hammered out a deal that didn't involve fraud.



Sunil Sethi / Broker, President, REALTOR, MBA / SUNIL SETHI REAL ESTATE
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