Short sales and banks
We all know that short sales must be approved by the lender, not the home seller. And not only is the process long but short sales are not always approved and it is especially difficult when two or more lenders are involved because second lien holders get little to nothing.
But sometimes, payments are demanded by second lien holders that are off the books (not on the HUD statement) in order to gain approval according Diana Olick, real estate reporter for CNBC. If proven, it is clearly illegal and fraudulent.
"Just as regulators, lawmakers and all forms of financial oversight boards are talking about new regulations to guard against mortgage fraud and another mortgage meltdown, there appears to be yet a new mortgage fraud out there today, allegedly perpetuated by agents of, yes, the big banks.
But here's what's not legal and what's apparently happening quite often recently. Since many second lien holders are getting very little, they are now allegedly requesting money on the side from either real estate agents or the buyers in the short sale. When I say "on the side," I mean in cash, off the HUD settlement statements, so the first lien holder doesn't see it.
I personally heard a recording of a phone conversation between a short sale real estate agent and a second lien lender, during which the second lien lender clearly asked for cash outside of the settlement and threatened to kill the deal without it." Read more about this fascinating story.
And on the subject of big banks, JP Morgan Chase earned $11.7 Billion last year in a remarkable rebound from the depths of the financial crisis and from the this shouldn't surprise you file, a planned tax on big banks is unfair and will have serious consequences according to the chief economist of the American Bankers Association.