Tuesday, June 25, 2013

FHFA IG, Nevada Feds Bag Hubby/Wife Real Estate Operators For Allegedly Structuring Short Sale-Leaseback Of Underwater Home In Effort To Stiff Bankster Out Of Loan Deficiency Without Unloading Residence; Straw Buyer-Relative Roped In By Suspects To Assist In Scheme: Investigators

From the Office of the U.S. Attorney (Las Vegas, Nevada):

  • A husband and wife who worked in the real estate profession in southern Nevada, have been charged in U.S. District Court in Las Vegas with conspiracy and fraud for making false statements to Wells Fargo Bank in order to get it to approve a short sale on their home, announced Daniel G. Bogden, United States Attorney for the District of Nevada.

    Cynthia Hosbrook, 41, currently a licensed real estate agent in Nevada, and Robert Hosbrook, 51, formerly a licensed real estate agent in Nevada, both of Henderson, are charged in a criminal indictment dated June 12, 2013, with one count of conspiracy to commit bank fraud and one count of bank fraud.

    According to the indictment, the Hosbrooks allegedly solicited a relative to act as a straw buyer for their residence at 2704 Mallard Landing in Henderson.

    In a short sale contract dated March 2, 2010, and in other paperwork submitted to Wells Fargo Bank, the Hosbrooks falsely represented that the sale of their home would be an arms length transaction, that it was between two unrelated parties, that no party to the contract was a family member or business associate, that there were no agreements that the seller would remain in the property as a renter, and that the short sale did not constitute straw buying, when they allegedly knew that they were selling the residence to a relative and a straw buyer.(1)

    The Hosbrooks also allegedly caused the relative/straw buyer to falsely sign a title company form on July 9, 2010, stating that the relative would be residing at the property, which the Hosbrooks knew was a false and fraudulent representation.

    Cynthia Hosbrook and Robert Hosbrook have been summoned to appear for an initial hearing and arraignment on June 21, 2013, at 3:00 p.m. before U.S. Magistrate Judge Carl W. Hoffman. If convicted, they face up to 30 years in prison and fines of up to $1 million on each count.

    The case is being investigated by the Federal Housing Finance Agency Office of the Inspector General, and is being prosecuted by Assistant U.S. Attorney J. Gregory Damm.
For the U.S. Attorney press release, see Husband And Wife Charged With Short Sale Fraud.

(1) Despite the fact that getting a mortgage lender to approve a deal like this appears to be quite difficult, if not impossible, unless a false representation is made, some real estate operators remain undeterred in their pursuit to peddle sale leaseback deals to underwater homeowners in the context of a proposed short sale in an effort to purportedly allow homeowners to unload a significant amount of home mortgage debt without actually having to move from their home.

See, for example, ShortSaleLeaseBack.org Helps Home Owners Avoid Foreclosure with New Program (Newly launched short sale lease back programs lets homeowners short sale to escape toxic mortgage debt and foreclosure, but lets them rent back the home):
  • The short sale leaseback program works in a similar way to a conventional short sale. This means that the toxic mortgage debt is completely removed, and the decimation of credit history is avoided.

    However unlike a normal short sale, the previous homeowner can remain in the home as a tenant. This stops a huge amount of family upheaval and stops people from having to dramatically change their lifestyle. When times are better, the homeowner may even be able to buy their home back at market price. This is known as a short sale buy back.

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