HENDERSON, Nev. – – Short-sale fraud, by many estimates, is quite prevalent in Las Vegas.
During the housing bubble, potential home owners were able to easily obtain financing to purchase homes and were left with a sky high APR and monthly payments that were clearly not in line with the money that was coming into the household.
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When the recession hit full swing the already high payments became un-affordable and many Las Vegas homeowners were in danger of losing their homes.
Others simply wanted to retain their homes but they wanted them at the current cheaper price.
In either case, they wanted a way out.
Enter the short-sale.
With permission from the mortgage holder and after signing documentation, a homeowner can sell their home to another party that they have no connection to.
A short-sale is more favorable to the departing owner than a foreclosure since they can purchase another home after a shorter waiting period, usually in two years.
Plain and simple, short-sales, when used honestly, offer homeowners a way out.
Some individuals and real estate agents have found a way to circumvent the legal requirements for a short-sale.
A couple sells their home, for example, using a straw buyer, to someone they know, usually a relative and the homeowner remains in the home.
Their monthly payment is substantially lower and they are happy.
But the banks aren’t.
Short-sale fraud and schemes when perpetuated by real estate agents essentially defrauds banks and the real estate agents still rake in their commissions.
Some use their knowledge on their personal home.
A Las Vegas couple, Cynthia Hosbrook, 41, who goes by Cindie Hosbrook, and Robert Hosbrook, 52, used their knowledge to buck the system by engaging in short-sale fraud of their own home in Henderson, Nev.
In February 2005, they purchased their home for $470,000.
In July 2010, according to Clark County property records, they sold the home for $250,000 to straw buyer Sarah M. Fuller, who is the mother of Cynthia Hosbrook.
In addition to the short-sale fraud of their home, the Las Vegas Sun reports that the couple were also involved in two other short-sale fraud incidents in 2008 and 2009.
Now they face up 30 years in prison and steep fines after pleading guilty to fraud.
Reaction to the lengthy sentence the couple faces has been met with mixed reactions with some voicing support for the couple.
It remains to be seen if the couple will face any substantial jail time, if at all, especially in light of Senate Bill 321, most commonly referred to as the “Homeowner’s Bill of Rights”, which took effect Oct. 1.
That bill nullifies the “arm’s length” clause that banks usually require for short-sales.
Although the wording in certain sections of the bill is debatable, it appears to ease the ban on short-sales to friends and family.
The Hosbrooks are schedule to appear in court on March 3.
Do you think short-sale fraud is really fraud, or should homeowners be able to sell their homes cheap to someone they know, continue to remain in the home and maybe even purchase the home back in the near future?