Ok, so I'm reading an indictment from the feds on some guys that bought a shortsale from a bank, then wholesaled it the same day for a profit. Can I pls get some feedback on whether this is getting some attention as being Illegal? Here is the full indictment
Seems like these guys may have done some extra things other than just wholesaling a shortsale. But is it fraud to negotiate a low offer with a bank, then sell the same house for a profit?
It depends! Some banks have seasoning rules from 30 to 90 days and if purchaser of a short sale flips it within that time frame could be trouble. Also full disclosure is very important, all parties involved need to be aware of what's going on.
Originally posted by @Kris Haskins: But is it fraud to negotiate a low offer with a bank, then sell the same house for a profit?
No but you must sign all kinds of disclosures and agree to the banks terms which often preclude reselling in a short period. In principal it is legal, but at some point you are likely to run afoul of the law.
I am not entirely sure on the legality of wholesaling a short sale. What I am aware of is that all major lenders will not allow the assignment of contract for a short sale.
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