Bank of America addendum addresses short sale fraud

A short sale addendum now being used by Bank of America is in line with the position our office has maintained all along.  When faced with seller, buyers or agents insisting there is nothing wrong with a  short sale transaction that involves flopping or money being received without full disclosure, this addendum will be something we can now rely on as additional proof the lender, in this case BoA, view these matters very seriously. When faced with these situations we may forward this addendum to all parties involved for them to review. Even if the transaction is not Bank of America, in my opinion it would be reasonable to expect all lenders to have the same thought process to the items above.

Highlights of the article include;

Bank of America has started requiring buyers and sellers to sign an addendum to its short-sale agreement. It’s entirely about fraud prevention. We want to ensure that the transaction is at arm’s length and that the property isn’t immediately flipped for a higher price without there being any repairs or upgrades.

The kinds of fraud the addendum is intended to curb are:

• Immediate Flipping/Flopping. Buyer agrees that property cannot be sold or otherwise transferred within 30 days of closing.
• Schemes in which parties collude or otherwise try to keep the home owner in the home or else pass along some kind of benefit to the home owner from the sale of the property.

The article that discusses this in more detail can be found here;

http://speakingofrealestate.blogs.realtor.org/2011/06/14/short-sale-addendum-aims-at-fraud-bofa-says/#more-5293