Industry NewsMortgage

Lenders on lookout for short-sale fraud

CoreLogic helping lenders track properties, real estate agents

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Mortgage data aggregator CoreLogic is inviting lenders to join a consortium-based service it says will allow members to monitor properties involved in short sales for evidence of subsequent fraudulent flipping, and uncover evidence of "unethical behavior" by real estate agents and others.Short sales have more than tripled since 2008 to an estimated 400,000 per year, and lenders are probably getting burned on about 2 percent of those transactions, according to a CoreLogic study of 250,000 short-sale transactions.CoreLogic found evidence of "egregious flipping" on 1 in 53 short sales, with lenders taking an "unnecessary loss" averaging $41,500 on those transactions.By definition, lenders take a loss on a short sale by agreeing to allow a homeowner sell their home for less than what they owe on their mortgage in order to avoid the potentially greater expense of foreclosure.CoreLogic looks for signs of questionable or fraudulent sales, such as rapid resales of...