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» VISIT US ONLINE @ DSNEWS.COM MARKET PULSE what constitutes a swindle versus a legitimate short sale flip? With short sale activity up, so is the potential for fraud, but A of similar ethnicity. At the time, it probably seemed like an innocent coincidence. However, in 2011, the buyer added his wife to the title in a joint tenancy. The thing is, she and the seller shared the same last name and were, in fact, siblings. the same agent handled both sides of the transaction. Dual agency is legal in California but not in all states. A neighbor reported that after the house was supposedly sold in 2010, no one moved out and the same people regularly came and went from the property. What's more, the same cars remained parked there. Coincidences only go so far. Then there was the bachelor who bought a It was a dual agency sale, meaning couple purchased a home in California's San Fernando Valley in 2005 for $675,000 but defaulted in 2009. The following year, they completed a short sale of the home for $363,000 to a man In 2008, he put the property on the market for $1 million. He went through three or four real estate agents and, possibly by design, defaulted in 2010. Several months later, his lender agreed to a short sale for $300,000. The buyer? The bachelor's girlfriend. In 2011, she sold the home for $410,000, ringing up a tidy $110,000 profit. "That unfolded in a down-market" with house in Orange County in 2005 for $700,000 and added $300,000 in home improvements. had multiple offers if the man had listed it at $410,000, and the bank, rather than the girlfriend, would have received the money in this non-arm's-length short sale," added Bryher, author of the book How to Commit Short Sale Fraud . . . and Get Away with It, from which the cases were culled. An arm's length transaction basically means no family, friends, business associates, or known acquaintances, she explains. "The property undoubtedly would have Deception Deficits Short sale fraud can occur when the parties the girlfriend making a 37 percent profit in less than 12 months, bristles Monique Bryher, a real estate broker based in Los Angeles. involved in a transaction—buyers, borrowers, or real estate professionals—fail to disclose af- filiations with other parties to rig sales at a low price and hide better offers from the distressed home seller, according to Freddie Mac. By concealing the higher offer, short sale fraud worsens losses to home sellers and taxpayers, the GSE says. 55