Tuesday, June 14, 2011

Recently-Issued Bankster Anti-Flopping Short Sale Contracts Put Real Estate Agents On Hot Seat As Brokers Bellyache

The Sarasota Herald Tribune reports:
  • New short-sale contracts issued by two of the largest banks in the country are causing concern in the local real estate community.
  • The contracts, which were issued by Bank of America and Wells Fargo, ask real estate agents to certify -- under penalty of perjury -- that the short sales they are conducting are "arms length" and that the properties will not be resold within 30 to 90 days of closing.
  • The object of the contracts, according to Sarasota attorney Evan Berlin, is to protect banks against what has become known as "flopping" -- a form of mortgage fraud in which real estate professionals get banks to accept low-ball prices for properties in some stage of foreclosure and quickly resell them at higher prices.
  • Though real estate agents acknowledge flopping is a legitimate concern for banks, they see the new contracts as another way in which banks are shifting more of the financial burden and liability of making sure mortgage fraud does not occur onto them. "The contracts put extra pressure on Realtors to do due diligence and could have a chilling effect on legitimate flip transactions," Berlin said.

For more, including contract excerpts from the Wells Fargo and Bank of America short sale documents, see New short-sale contracts upsetting Realtors.