Short-sale risk: 'property flopping' 
Appraisers: BPOs raise risk of fraud in short sales
By Matt Carter, Tuesday, March 9, 2010.
Flickr photo by TheTruthAbout...Industry groups representing appraisers say the Obama administration's short-sale incentive program lacks safeguards to prevent mortgage fraud, including so-called "property flopping" schemes in which real estate agents help investors obtain distressed properties at deflated prices.
In a letter to Treasury Secretary Timothy Geithner, four groups representing appraisers, including the Appraisal Institute and the American Society of Appraisers, urged the Obama administration to prohibit the use of broker price opinions (BPOs) when valuing properties eligible for the Home Affordable Foreclosures Alternatives (HAFA) short-sale incentive program.
"Generally speaking, real estate agents and brokers are not independent or properly trained valuation specialists," the groups said. "They have an inherent bias toward quick results and action, which produces a fee for themselves irrespective of whether the lender ... gets a fair return on the short sale."
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