So I have been playing around with a new feature added to Property Shark: Deep Owner Search. You can type in a person’s name, a corporation name or an address and see what properties are associated with that information. From there, you can also search that person’s associates and so forth. Since I have practiced real estate law for the past 15 years, I have a lot of names at my disposal so I search to see what everyone has been up to.
One of my searches led me to a couple of REO property flips involving a corporation represented by the same attorney. All the properties are located in Brooklyn. One of the transactions, the spread was over $320,000! Nice profit, isn’t it? So how did they do it? Buyer took out a conventional mortgage of $635,000 and closed the beginning of November 2008. Most, if not all, conventional lenders have seasoning requirements. Did this corporation buy the property and hold for 90 days? Nope. Now I am sure you are wondering – well how does she know? I know, because all of these transactions are part of the public record and, if you know what to look for, it is honestly simple to discern the methodology. These particular parties are stupid. But, they also had to be aided by the title company. So what did they do?
Take a look at this snapshot of one of the transfer tax documents – the RP5217 – that I copied straight from the ACRIS system:
Now look at the crossed-out dates (this one is such a particularly poor job, but it closed). I propose that it did, in fact, close on September 10, 2008. Look at the CRN number on the bottom of the form (circled in red). The CRN number starts with the year, month and day the property is supposed to change hands and is inputted by the drafter. These transfer tax returns are usually prepared within days of closing. This vast time difference would never occur. The parties needed to back date the transaction because of the bank’s seasoning requirements. Also, they needed to back date it far enough that they could avoid any additional value requirements for transactions taking place within 180 days of acquisition.
Suffice it to say this is only one of this buyer’s reo transactions and they rest follow the same trend. It is all laid out there in the public record. This kind of trend would certainly supply law enforcement with enough probable cause to obtain a warrant to secure the documents from both the first and the second closings. Perhaps there will be a show check, fake income documents and other indicia of fraud – who knows?
Now question yourself, if I can find this blatant evidence of REO fraud, who else could be looking?
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Related posts:
- Mortgage Assignments are Not the Real Estate Investor’s Dream!
- Short Sales & No-Flip Clauses in the Approval Letter – Removing a Roadblock
- Seasoning and FHA’s Time Restrictions on Resales – a Legal Analysis
- Buyer $5,000 Short – How to Close the Gap…from a NY Point of View
- Jack of All Trades and Master of None: Attorneys Wearing Multiple Hats in a Transaction
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