Short Sale, Foreclosure and Strategic Default


Wednesday, June 13, 2007

More short sale traps for realtors and homeowners

Mark Sumpter is very good at marketing. I frequently run across his stuff every time I look for information for this blog.

He is selling courses to people wishing to profit as investors from short sales. His marketing piece is the state of the art from a year ago. Hes got the personal story, the pitch, the appeal to greed, the testimonals and the risk reversal promise.

He also provides a wealth of questionable practices:

1. He says Short sales can be very profitable for investors. (Note to homeowners many short sale "advisers" are investors trying to get leads to distressed properties)

2. He (and other trainers) state investors must get the deed to the property from the homeowners prior to contacting the bank. Why? Because, if they don't get the deed an investor may lose time, effort and money setting the deal up and then seeing the homeowner back out. Mr. Sumpter explains you only have to lose 30,000 dollars once before you make sure you get the deed. On another site I saw them speak of putting the deeds into land trusts before commencing negotiations with the bank.

Note to homeowners speak with and attorney before you do anything with your deed. Now I understand why there are warnings from Hud about the scams out there.

3. Next Mr. Sumpter advises investors not to tell the banks they are investors. He advises that you call the bank and state you represent the buyer or the homeowner. He warns sometimes the bank may ask if you are a real estate attorney. Mr. Sumpter just says repeat what you just said.

Note - to everyone who reads this blog. When someone repeats what they just said in response to your question (make an internal memo this person has not respect for my situation- he is most likely a crook using a script.) repeat your question and keep repeating your question till you get an answer.

4. Mr. Sumpter also says the lender is going to ask for a hardship letter and information about the homeowners finances, including: bank statments, pay stubs, income statements, and so on. "Be prepared to send everything they ask for because if you don't it will not be accepted".

If the banks rejects the short sale, a smart lawyer may find you responsible for a host of damages. You are practicing law without a license and you may also be preventing all future short sales from happening. Other damages in Florida and California will have to do with the intersection of anti deficiency laws, foreclosure, bankruptcy and homestead protections.

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