Some relevant definitions

Foreclosure is a legal process by which a defaulting borrower is deprived of their interest in the property.

Real estate owned (or REO), on the other hand, is a real estate asset owned by the lender that is taken back during the foreclosure process.if the property is not disposed of by auction or other means.

What is a Fiduciary or what is also known as a True Agent ?

An Agency relationship creates a Fiduciary Relationship with the employer known as a Principal. A Fiduciary acts in a position of trust or confidence for another. The Fiduciary owes complete allegiance to the Principal. most familiar are the relationships one has with their doctor or attorney.

In Florida and in most all other States - there are other relationships created by Real Estate Firms with their Customers. In Florida the relationship you are most likely to get is called a ‘Transaction Broker Relationship’

The reason for this is to allow the large brokerages [and small] to have other Licensees conduct business with buyers and sellers within the same Brokerage - as it is illegal and a felony to represent both in the same transaction as a true Agent.

To make matters worse, in Florida, there are no disclosure requirements and the presumption by law is that you will be represented by what is known as a Transaction Broker

As a Buyer, [or for that matter a Seller] if you want the legal protections afforded by total confidentiality, obedience, loyalty, and full disclosure - you must ask for and execute a legally binding Agency Agreement.

Bottom Line: Even though someone calls themselves your Real Estate Agent, the chances in Florida of that being so is virtually Zero without a signed Agency Agreement

Another Real fraud rears its ugly head

In addition to all other types of Fraud when dealing with real estate ... there is a new one: Short Sale Fraud

The Scam: Borrowers owe more than the current value of their home so they fake financial hardship and no longer make their mortgage payments. An accomplice of the borrower then submits a low offer to purchase the property in a short sale agreement. The lender agrees to the short sale, unaware that it was premeditated. The property, after being purchased at the reduced price, is then often resold at the home’s actual value for profit.

Red Flags: The borrower suddenly defaults on the mortgage with no workout discussions with the lender, an immediate offer is made to a lender at a short sale price, the short sale offer is less than current market value, or a cash back is offered at closing to the delinquent borrower (disguised as “repairs” or other payouts, for example) and is not disclosed to the lender, according to Fannie Mae.

Be careful ......

You can report instances of suspected t  Stopfraud.gov.

Another BEWARE when purchasing a Condo

If you are thinking about purchasing a Condo because there are so many inexpensive Units on the market - I would advise strongly to do more than just negotiate the best price and/or loan terms. You must make a careful analysis as to the status of the Condo Association.

Ok, what does that mean ? It means you must due diligence on the condition of the common elements of the complex and do a thorough analysis of the Association's records and minutes.

Condition of Common Elements:

In addition to inspecting the Unit you may be purchasing, I would suggest that your Inspector take a tour of the Property with you to get an idea of the overall condition of the Property. It very could be that the Association has been deferring maintenance in order to save cash. This might lead to major Assessments in the future long after you close on the Unit.

Minutes of the Association

I would suggest strongly that you review the Minutes to see if potential expenditures are being discussed and to see if there is current conversations as to futures assessments.

Financial Condition of the Association

You must review the Income and Expense Statements and Balance Sheet to get an idea as to the financial condition of the Association. Find out what percentage of the Units are occupied and what percentage are Owner occupied. Check the Receivables to get an idea how current are the collections of the dues. Are there Payables on the Balance Sheet that need to be paid but are not being paid because of the "cash" situation.

Bottom Line

Be careful that you don't end up purchasing a pig in the poke.

The same suggestions above apply to purchasing and Property covered by a Homeowners Association.

MORTGAGE RESCUE SCAMS: TOP 10 WARNING SIGNS

“Pay us $1,000, and we’ll save your home.” No legitimate counselor will require you to pay such a large sum before they do any work for you.

Image by respres via Flickr

“I guarantee I will save your home – trust me.” Unrealistic promises are a key tip-off that an arrangement may not be legitimate.

“Sign over your home, and we’ll let you stay in it.” This is a dangerous proposition: signing over your home gives another person the power to sell the house or evict you, and you’ll still be liable for the mortgage.

“Stop paying your mortgage.” Never stop paying your mortgage unless you have contacted your mortgage lender directly!

“If your lender calls, don’t talk to them.” You should keep in close touch with your lender, as their understanding of your situation is crucial to a satisfactory resolution.

“Your lender never had the legal authority to make a loan.” False arguments like this are meant to convince you that you are not obligated to pay your mortgage. Don’t fall for them!

“Just sign this now; we’ll fill in the blanks later.” Never sign anything you haven’t read in detail and clearly understood, and don’t let anyone pressure you into signing.

“Call 1-800-Fed-Loan.” It’s easy to make a scam look like part of a legitimate government program. Call your lender to see if you qualify for federal assistance—which does not require you to pay high fees.

“File for bankruptcy and keep your home.” Bankruptcy only stops the foreclosure process temporarily. Stop paying your mortgage, and your lender will eventually foreclose upon your home.

“Why haven’t you replied to our offer? Do you want to live on the streets?” High-pressure tactics are a sure sign of shady business practices. Legitimate foreclosure counselors never treat a client in such a way.

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