Fannie Mae is Talking Short Payoff Fraud – Demanding Full disclosure of all material facts in a short sale.  Call for everyone to play fair.

Sounds like some clever folks (or not so clever I guess you would say) are perpetrating short sale fraud on Fannie and Freddie.  Apparently, their fraud investigation unit is up in arms over people not fully disclosing every aspect of a short sale to them so they can make their best decision possible.  They are even fashioning definitions for illegal activity.  Here is their definition of short payoff fraud:

Any misrepresentation or deliberate omission of fact that would induce the lender, investor or insurer to agree to the terms of a short payoff that it would not approve had all facts been known.” Misrepresentations in these schemes may include the buyer of the short payoff property, a subsequent transaction at a higher price, and/or the selling borrower’s hardship reason used to qualify for the short payoff. In many instances, the short payoff fraud will involve a “facilitator,” engaged by either the listing agent or the selling borrower, to assist with negotiating the transaction.

Here is the link to the story on their site:

http://www.freddiemac.com/singlefamily/news/2010/0412_payoff_fraud.html

I would propose a truce.  Lenders, Loan Servicers and Investors play fair in loan mods, (no misrepresentations or concealments) and everyone plays fair in short sales.  Seems like a fair truce.

Seriously, this goes out to brokers and homeowners and highlights the need to fully disclose all material aspects of your short sales transactions.  If you are falsely charged with short sales fraud or mortgage fraud (their other main beef with homeowners who have the audicty to try to save thier own financial hide) and need to hire an attorney, feel free to contact me to discuss.  I imagine they are going to try to make an example out of somebody to send a message to everyone.  Other than that good luck in carrying out your short sale!