The California State Attorney General, Edmund G. Brown Jr., has joined the California Department of Real Estate (DRE) and the State Bar of California in warning California homeowners about the sharp increase in short sale fraud.  There are so many homeowners struggling to make their mortgage payments that a whole new industry of “short-sale negotiation" has been created.  While short sales can help underwater homeowners, they have also created an area for scammers to take advantage of people in financial distress.  Only three months ago, there were almost no complaints of short sale fraud filed with the DRE.  Now, over forty complaints are being investigated by that same department.  Before working with or paying a short sale negotiator, homeowners should be aware of the following red flags:  the individual holds no real estate license; the individual is charging upfront fees and/or surcharges; the individual plans on submitting a "straw buyer" offer to the short sale lender(s).  Note that any consumer can look up an individual's real estate license and its status on the DRE website.

Short sales can provide a way for struggling homeowners to avoid foreclosure and save their credit. Real Estate Commissioner Jeff Davi says, “Short sale fraud appears to be the fraud of the moment, and it is proliferating statewide.  Consumers, licensees and lenders must all arm themselves with the tools necessary to avoid such scams.”   (In an effort to better serve my clients and help them avoid these scams, I am a Certified Distressed Property Expert.)

For further information, check out this article, and check out these Tips On How To Avoid Being Scammed.