In the present real estate market, law enforcement authorities have focused more of their resources on mortgage fraud and bank fraud cases. However, the types of cases presently being brought into court are different from the type of cases we see in a stronger real estate market. A recent case against a pair of real estate agents that involved a short sale is an example of the type of bank fraud cases authorities are now focusing on.
A short sale is a type of real estate transaction that often happens when the present owner owes more on the mortgage than the property is worth. The short sale happens when the bank holding the mortgage agrees to accept less money than what is owed on the mortgage in order allow the sale.
In the recent case, the listing agent on a piece of property allegedly conspired with another real estate agent to defraud Regions Bank, the bank that owned the mortgage on the property. Allegedly, the listing agent received an offer to buy the property for $132,500, but she informed regions bank that the highest offer she received was $102,375 from BOS Asset Management. Allegedly, the agents concealed the higher offer from the bank, and the bank agreed to sell the property for $102,375 to BOS Asset Management.
Allegedly, the two agents arranged for two sales of the property on the same day. The first sale transferred the property from Regions Bank to BOS Asset Management. Then, the second sale transferred the property from BOS Asset Management to the original high bidder for $132,500. The agents allegedly agreed to split the $30,125 difference.
Both agents pleaded guilty to one count of bank fraud. Although sentencing guidelines called for a minimum sentence of 21 months in prison and prosecutors requested a sentence of 21 months, the sentencing judge disagreed. Recently, the listing agent was sentenced to eight months in federal prison, to be followed by three years of supervised release.
Sources: Hartford Courant, “Real Estate Agent Sentenced in Short-Sale Fraud,” Kenneth R. Gosselin, July 26, 2011
Justice.gov, “Real Estate Agent Sentenced to Federal Prison for Defrauding Bank in Short Sale Mortgage Fraud Scheme”