DEE JOHNSON

1
DEE JOHNSON

• Enforcement Director
• Division of Real Estate
• Department of Commerce

2
SHORT SALES

• SCAMS AND OTHER FRAUDULENT
• ACTIVITIES

3
TECHNOLOGY

• Is accelerating all types of fraud.
• Computers are making the use and requirement of
  originals obsolete.
• Photoshop is making pictures a questionable form
  of evidence.
• PDF files are no longer a form of protection.
• Fraudsters are leading advancements.

4
TECHNOLOGY

• Is accelerating all types of fraud.
• Computers are making the use and requirement of
  originals obsolete.
• Photoshop is making pictures a questionable form
  of evidence.
• PDF files are no longer a form of protection.
• Fraudsters are leading advancements.

5
TECHNOLOGY

• Is accelerating all types of fraud.
• Computers are making the use and requirement of
  originals obsolete.
• Photoshop is making pictures a questionable form
  of evidence.
• PDF files are no longer a form of protection.
• Fraudsters are leading advancements.

6
TECHNOLOGY

• Is accelerating all types of fraud.
• Computers are making the use and requirement of
  originals obsolete.
• Photoshop is making pictures a questionable form
  of evidence.
• PDF files are no longer a form of protection.
• Fraudsters are leading advancements.

7
TECHNOLOGY

• Is accelerating all types of fraud.
• Computers are making the use and requirement of
  originals obsolete.
• Photoshop is making pictures a questionable form
  of evidence.
• PDF files are no longer a form of protection.
• Fraudsters are leading advancements.

8
HOTTTEST ISSUES

• Short sales Schemes
• Foreclosure rescue schemes
• Loan modification schemes
• Affinity fraud
• New construction schemes
• Purchase/refinance schemes
• Artificially inflated appraisals

9
HOTTTEST ISSUES

• Short sales Schemes
• Foreclosure rescue schemes
• Loan modification schemes
• Affinity fraud
• New construction schemes
• Purchase/refinance schemes
• Artificially inflated appraisals

10
HOTTTEST ISSUES

• Short sales Schemes
• Foreclosure rescue schemes
• Loan modification schemes
• Affinity fraud
• New construction schemes
• Purchase/refinance schemes
• Artificially inflated appraisals

11
HOTTTEST ISSUES

• Short sales Schemes
• Foreclosure rescue schemes
• Loan modification schemes
• Affinity fraud
• New construction schemes
• Purchase/refinance schemes
• Artificially inflated appraisals

12
HOTTTEST ISSUES

• Short sales Schemes
• Foreclosure rescue schemes
• Loan modification schemes
• Affinity fraud
• New construction schemes
• Purchase/refinance schemes
• Artificially inflated appraisals

13
HOTTTEST ISSUES

• Short sales Schemes
• Foreclosure rescue schemes
• Loan modification schemes
• Affinity fraud
• New construction schemes
• Purchase/refinance schemes
• Artificially inflated appraisals

14
HOTTTEST ISSUES

• Short sales Schemes
• Foreclosure rescue schemes
• Loan modification schemes
• Affinity fraud
• New construction schemes
• Purchase/refinance schemes
• Artificially inflated appraisals

15
SHORT SALES

• SCAMS
• AND
• OTHER
• VARIATIONS

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DISCLAIMER

• Not all short sales are scams.
• Not all short sale experts are scammers.
• Every lender has their own policies.
• Not all real estate licensees know how to handle
  short sales.
• Not every deal qualifies for a short sale.
• Not all short sales are approved.

17
PROPHECY

• I guarantee,
• someone will walk
• out of here and will be
• convinced that all short sales
• are scams.
• THEY ARE NOT

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TODAYS MARKETPLACE

• There is a place for short sales.
• Short sales always lead to a transfer of title.
• Short sales require an agreement between buyer
  and seller.
• Lenders want property exposed to market.
• Short sales generally need the involvement of a
  real estate licensee.

19
WHEN GOOD IDEAS GO BAD

• Wherever there is an opportunity someone will
  fill it.
• Not all players are trying to help the public.
• Many homeowners are being taken advantage of.
• Scammers look and sound legitimate.
• Big money is involved.

20
CLEAN TRANSACTION
21
FACILITATORS

• Facilitators are interjecting themselves into the
  transaction and taking the place of the real
  estate agent. They either need to be licensed or
  work with a licensee.
• Facilitators are failing to disclose to all
  parties which parties are performing which
  functions.
• End buyers are not aware the property is being
  flipped.

22
THE SCHEME
23
NEW TWISTS

• Scammers are convincing homeowners to quitclaim
  property to the scammer.
• Scammers are convincing homeowners to vacate
  their property.
• Scammers are forming JVAs and LLCs to receive
  title to property.
• Homeowners think it may stop foreclosure.
• Homeowners are told to file bankruptcy.

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NEW TWISTS

• Scammers are bringing in tenants to maximize
  profits while they are waiting for approval from
  the bank on the short sale. Tenants are being
  told that they may purchase the property under a
  lease option. Tenants pay option money and rent
  and then are evicted from the property.

25
NEW TWISTS
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DRIVEN SCHEMES

• The scammers have included additional money
  making steps in the transactions.
• High facilitators fee.
• Lease and option from unaware tenant.
• Money from flip, straw buyer to end buyer.
• Lien and other recorded interests that involve
  money.

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NEW TWISTS
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NEW TWISTS

• Scammers are recording liens and notice of
  interest on subject property to convince the
  lender that they should accept sale.
• Most liens are not subordinate to trust deeds,
  but show seller is in more debt.
• If lender pays third party debt, the scammers
  make more money.
• Scammers profit either way.

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NEW TWISTS
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IDEAL CASE 4 SCAMMER
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WHATS THE DIFFERENCE

• The Real Estate Licensee.
• Generally licensees wont participate in the scam
  and warn the client.
• We want a licensee involved to protect the
  public, thats their job.
• Fiduciary duty to client.

32
UNINTENDED CONSEQUENCE

• Most sellers are not told that they may face tax
  consequences because of the debt forgiveness.
  That is a taxable item. It can be very expensive.
• Most sellers do not know that their own lender
  may want a personal note for all or part of the
  short fall amount on the loan.