Flippin’ Short Sales

I will never forget reading a sign that was posted on the Venetian Causeway a couple of years ago. The pitch was something along these lines – “Do You Have Excellent Credit? Need Fast Cash? Help Us Buy Real Estate. No Risk!”

Unfortunately, Miami continues to suffer from real estate fraud, and flipping a short sale has been the latest craze for several months now. Whether Medicare fraud, mortgage fraud, insurance fraud, it’s all here. Then months ago, one of my agents was personally involved in flipping a short sale deal, and after catching wind of the scheme, I had to spend days to skillfully work my way out of it. As a result, I terminated our relationship with the client and agent in the same week.

So finally some good news came across the wire this week to help us put a stop to this “flip your short sale” bonanza. According to a recent article published by Florida Association of Realtors, titled “Home short sale flips nixed,” Attorney’s Title Insurance Fund will no longer provide title insurance on deals made with closing flips of short sales.

The formula is simple – the buyer and seller work together to convince the existing mortgage holder to sell the property at a low market value. The buyer, or investor, then resells or flips the property at an inflated price to a new buyer and closes on the same day. The sale occurs simultaneously and the investor then pockets the difference.

So what is the issue? There are several, including defrauding the original mortgage holder, defrauding the new mortgage lender (if there is purchase money financing involved), the end buyer paying an inflated price over market value (memories, anyone?), collusion, professional liability, and the list goes on.

Flipping short sales is not good for anyone, it’s just more of the same. Kudos to Attorney’s Title Insurance Fund for taking a stand.

If you would like further information in regard to buying, selling or renting Miami real estate, please do not hesitate to contact us at info@miamiangelproperties.com.

Florida Foreclosure Laws

If you are planning on purchasing distressed property in the state of Florida, then you should be knowledgeable with the local foreclosure laws. Please find the quick facts:

• Timeline: Typically 180 days
• Right of Redemption: Yes
• Deficiency Judgments Allowed: Yes
• Primary Security Instruments: Mortgage
• Judicial Foreclosure Available: Yes
• Non-Judicial Foreclosure Available: No

All mortgages are foreclosed in equity. The foreclosure claim shall, if tried, be tried in the court without a jury. In a mortgage foreclosure action, the court severs, for separate trial, all counterclaims against the foreclosing lender.

The court order of foreclosure is required to specify how the foreclosure must take place, and the foreclosure must take place on those terms. When a legal advertisement or notice of the foreclosure is required to be placed in the newspaper, then it is the responsibility of the lender or their representative to place such an advertisement or notice.

Equitable Right of Redemption ends at the foreclosure sale. There is a period of time after the sale that “the court reviews the sale to ensure that a fair price has been paid.” This period of time, which is typically ten days, allows parties to object to the sale on the basis that proper procedures were not followed or collusion existed between bidders, for example. Following this period of time, the Certificate of Sale is filed and the sale is confirmed. If the sale is not confirmed, then another sale is ordered. Following the confirmation of the sale, the lender may sue the former borrower to obtain a deficiency judgment.

Recently, mortgage law experts claimed that the incentive to walk away from a home loan is highest in states that have anti-deficiency statutes, which prohibit lenders from suing borrowers for additional funds following foreclosure. This handful of non-recourse mortgage states includes the high-foreclosure states of Florida, California and Arizona.

Are you looking for a Miami or Miami Beach investment property at a deep discount? Are you looking for a discounted short sale or bank owned property? Ross Milroy of Miami Angel Properties, LLC may be reached at 305-673-5300 or info@miamiangelproperties.com.

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