As Short Sales Increase, So Does Suspicious Activity

At the start of this year, the number of short sales has outpaced the number of REO sales in 12 states. Short sales are increasingly popular with investors as a way to maximize returns from foreclosure sales. Along with the increase in short sales comes an increase in “suspicious mortgage activity reports.” These reports don’t necessarily signal that a crime was committed, but it does raise the flag that some sort of fraud is suspected.

According to Gagan Sharma, Chief Executive of BSI Financial, “More efforts should be made to prevent short sale fraud so that investor returns are maximized.” To help combat the problem, service providers like are asking bidders to leave a deposit on their credit card or provide proof of bank funds, if paying in cash. Not completely unexpected, the states with the most suspicious activity reports are California, Florida, Nevada, Hawaii, and Washington DC.

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