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Valuation reviews can prevent short sale fraud
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Thursday, January 9, 2014
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Most appraisers and valuation professionals understand how a typical short sale process works, but many may not be as familiar with the ways that short sale fraudsters are breaking into the system for their own gain. Short sale fraud is one of the fastest growing fraud types, with excess losses to lenders and investors estimated by CoreLogic to be more than $350 million annually. Until recently, short sale fraud was one of the more challenging types of valuation fraud to detect. But now, new analytics and tools in the hands of trained appraisers and professional valuation experts can help lenders and mortgage servicers turn the tables and detect more short sale fraud schemes before they cause financial damage.
A short sale, though obviously not ideal for the homeowner, can make sense in the current market in a variety of different scenarios. One such scenario would be if homeowners are experiencing difficult financial circumstances that prevent them from qualifying for options that would allow them to keep their home. Alternatively, an individual may need to move in order to keep or obtain employment, even though their property value is less than the mortgage they hold and they can’t sell at a price that would cover the outstanding mortgage amount. Buyers benefit because the property is often sold at a reduced price, though repairs may be necessary due to the seller’s inability or potential unwillingness to handle them prior to listing or selling the home.
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