Wednesday, September 14, 2011

Real Estate Agents Cautioned Against 'Reverse Staging' Short Sale Fraud

Robert Freedman, Senior Editor at REALTOR® Magazine writes:

  • If you’re thinking about working with a financially distressed seller and the house he wants to sell is trashed, take the extra time to be sure he didn’t trash it himself.

  • One of the types of short sale fraud that Fannie Mae is seeing these days is “reverse stagedhouses. In these cases, owners trash their house to knock down the property value.

  • A buyer with whom the owner is colluding then comes in with a low-ball offer, buys it and fixes it back up, then flips it for its real market value. That seems like a brazen scheme, but mortgage fraud by its nature is a brazen activity.(1)

For more, see Fraud: Are Your Clients Using Reverse Staging?

(1) According to Kim Ellison, Fannie Mae senior industry relations manager for the mortgage fraud program, Fannie conducts post-closing reviews and do proactive database searches looking for patterns and trends by pulling in MLS data and public records and looking at listing information compared to what they've been told, but that the majority of the information comes from tips, the story reports. Fannie's tip line is 800/7-fannie, and e-mail,

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