Wily Real Estate Agents Found a Way to 'Flop,' Scamming Lenders on Short Sales
Banks have made it harder to get a mortgage in recent years, after a national lending spree to buyers with dubious qualifications that contributed to an ongoing foreclosure crisis.
But, adjusting their tactics to the new economic reality, two wily Connecticut real estate agents found a way to profit despite the downturn, Bloomberg reports.
Hired to market “short sales” of homes being offered to purchasers at less than their current mortgage balance but more than the amount the lenders would gain by foreclosing, the agents persuaded lenders to accept low offers for less than the properties were worth. Then they turned around and sold the properties to others who had submitted higher offers that the agents concealed from the mortgage-holders, pocketing extra profit.
The agents, Sergio Natera and Anna McElaney, have been convicted of fraud and will be sentenced in August in federal court in Hartford.
Their lawyers declined to discuss the case. But attorney Mark Bederow, who represents McElaney, noted that, in general, “The mere act of a buyer in a short sale selling again quickly isn’t per se fraudulent. That’s business.”
Such “flopping” schemes concerning properties worth less than their mortgage balances are becoming more common, regulators and other observers say. The homeowner can also profit, offering a kickback for a lowball appraisal to persuade the lender to approve a short-sale payoff and then selling the house for a higher amount and keeping the difference.
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