In a recent San Diego Real Estate Blog post we discussed potential tax consequences of short sales. There is an equally serious or even more serious danger that is related to the decision to attempt a short sale at all. There can be actual criminal consequences to pursuing a short sale in the wrong situations.
You see, short sales are intended to be for people who are in legitimate financial distress. Many homeowners wrongly believe that anyone should qualify for a short sale. But the banks require the seller to show financial hardship, and proving financial hardship requires lots of documentation. Banks want to see every asset and every bank account owned by the home seller to verify that the seller does not have the resources to pay off the mortgage in full.
Some short sellers are attempting to hide assets, only providing partial reports of their true wealth. Some people are hiding bank accounts or otherwise understating their finances in order to improve their chances of obtaining short sale approval from the lenders. This is not a good idea at all.
People who hide assets in a short sale situation are committing “Short Sale Fraud.” Defrauding a bank is serious business and it can and should have criminal repercussions to the home seller and to any real estate agent who assists with the fraud.
As real estate professionals, our job is to help people determine their best options when buying or selling homes in San Diego CA. For us it is not about making sales, but rather about helping people. But we will draw the line at helping people commit fraud or other criminal or unethical acts.
If you were on the other side of the transaction, you would not want us to help someone else defraud or otherwise take advantage of you. Our reputations are our livelihood. Please contact us anytime for honest and ethical real estate advice.
I think apprehensive awareness has to be spread on this fraudulent process of selling homes. Buyers are always cautious just as the realtors, but in few cases they are easily deceived.