© Copyright The Distressed Property Institute, LLC April 2010 Originally Published: July, 17, 2009

Updated: April 12, 2010

The Distressed Property Institute, LLC assumes no responsibility nor guarantees the accuracy of this document. The

Distressed Property Institute, LLC is not engaged in the practice of law nor gives legal advice. It is strongly recommended

that you seek appropriate professional counsel regarding your rights as a homeowner.

Distressed Property Institute Stands Firmly Against Real Estate Fraud

Industry-leading organization publishes statements regarding Home Financing modification scams, short

sale flips, and other forms of fraud in the real estate industry.

The Distressed Property Institute, the premier organization educating real estate professionals on

how to help homeowners avoid Foreclosure, is officially positioned against fraud in the real estate

industry, specifically as it pertains to Home Financing modification scams, Short Sale flips and options

contracts.

“It is the firm stance of the Distressed Property Institute that fraudulent behavior perpetrated

against homeowners is deplorable, and there is no excuse for these actions, whether personal,

financial or otherwise,” said Alex Charfen, co-founder and CEO of the Institute. “The number

alleged cases of fraud against American homeowners is increasing, and in some areas arrests

are on the rise. We support the efforts of our administration and law enforcement to crack down

on these predatory practices.”

In 2009, the U.S. Treasury, U.S. Department of Justice, Federal Bureau of Investigation and

Federal Trade Commission issued statements affirming their unified stance on these issues:

U.S. Department of Justice and U.S. Treasury Department

Press Release: April 6, 2009 – Federal, State Partners Announce Multi-Agency

Crackdown Targeting Foreclosure Rescue Scams, Loan Modification Fraud

“This administration is deeply committed not just to providing at-risk homeowners with

assistance but also to cracking down on anyone who seeks to defraud them. … [The]

Treasury is also issuing an advisory alerting financial institutions to the risks of emerging

schemes related to loan modifications. The advisory identifies certain ‘red flags’ that may

indicate a loan modification or foreclosure rescue scam … Examples of possible signs of

fraudulent activity, such as requiring that fees be paid before services are provided, are

listed in the advisory.”

i

Federal Bureau of Investigation

Press Release: July 7, 2009 – FBI Issues

Home Financing fraud hurts borrowers, financial institutions, and legitimate homeowners. …

The FBI, in conjunction with our law enforcement, regulatory, and industry partners,

continues to diligently pursue perpetrators of Home Financing fraud schemes.”

2008 Home Financing Fraud Reportii

Federal Trade Commission

Press Release: July 15, 2009 – Federal and State Agencies Target Home Financing

Foreclosure Rescue and Loan Modification Scams

“People facing foreclosure should avoid any company or individual that requires a fee in

advance, guarantees to stop a foreclosure or modify a loan, or advises the homeowner to

stop paying the Home Financing company.”

iii

Freddie Mac

April 12, 2010 – Emerging Fraud Trends: Short Payoff Fraud

“Given increased defaults and declining property values in certain locations, the

Home Financing industry is experiencing an increase in short payoffs, sometimes called short

© Copyright The Distressed Property Institute, LLC April 2010 Originally Published: July, 17, 2009

Updated: April 12, 2010

The Distressed Property Institute, LLC assumes no responsibility nor guarantees the accuracy of this document. The

Distressed Property Institute, LLC is not engaged in the practice of law nor gives legal advice. It is strongly recommended

that you seek appropriate professional counsel regarding your rights as a homeowner.

sales. In fact, over the last two years, short payoff volume at Freddie Mac has grown

more than 1,000 percent (2007-2009). This upward trend in volume leaves the market

ripe for incidences of short payoff fraud.”

iv

Addressing its membership organization of more than 22,500 real estate professionals

nationwide, the Institute has distributed this official statement among its members.

“Fear should not drive us to act ethically. The current market conditions have provided us with an

unprecedented privilege to help struggling homeowners like no other time we’ve seen. These

challenges are actually opportunities for us to become better agents, better citizens, and better

people.

“Now more than ever, it is our personal responsibility to conduct our businesses and ourselves

with utmost integrity; this has never been more vital to the success of the real estate industry, the

recovery of our country, and to homeowners in need.

“We applaud the efforts of the branches of the U.S. government to stamp out this rampant fraud,

and have aligned the Institute with this goal. We will not tolerate the abuse and predatory actions

committed upon the most vulnerable homeowners.”

Following is the Institute’s policy on fraudulent behavior as it pertains to Home Financing modifications

and short sale flips:

I. Home Financing Modification Fraud

It is the policy of the Distressed Property Institute not to educate or train students on

the process of facilitating a Home Financing modification, beyond directing agents to have

clients (homeowners) contact their lenders if a modification appears to be an option,

and providing general information on Home Financing modifications so homeowners can

effectively contact lenders and pursue this option.

The Institute does not support, nor does it condone, the practice of agents accepting

a fee for the service of facilitating a Home Financing modification, even if there is a promise

to refund the fee if the service expectation is not met. Our official stance is that this

practice constitutes fraud, which is in line with statements made by the U.S. Treasury

Department.

II. Short Sale Flip (and Options Contracts) Fraud

It is the policy of the Distressed Property Institute not to educate or train students on

the process of flipping short sale properties beyond providing a severe warning,

which includes a basic overview of this process and detailed information on how to

avoid unknowingly participating in fraudulent activity.

The Institute does not support, nor does it condone, the practice of flipping short sale

properties due to the potential illegalities and blatant unethical nature of these

transactions. We do make an exception in the case of rehabilitation projects –

however, this process involves providing a measureable service to improve the

condition of the property, and is different than the standard short sale flip.

“The Distressed Property Institute seeks to train agents on how to find the best solution for each

individual homeowner,” Charfen said. “Agents who charge a fee for a service they’re not licensed

or adequately trained to provide, and which the government has identified as fraudulent, cannot

be tolerated.

© Copyright The Distressed Property Institute, LLC April 2010 Originally Published: July, 17, 2009

Updated: April 12, 2010

The Distressed Property Institute, LLC assumes no responsibility nor guarantees the accuracy of this document. The

Distressed Property Institute, LLC is not engaged in the practice of law nor gives legal advice. It is strongly recommended

that you seek appropriate professional counsel regarding your rights as a homeowner.

“Additionally, agents or investors who misrepresent the true value of a short sale property, or

participate in less than full-disclosure with the lender, are participating in fraudulent activity.

These practices are not in line with our core values.”

About the Distressed Property Institute, LLC

The Distressed Property Institute trains real estate professionals to engage with and assist

homeowners facing hardships. The Institute has developed a curriculum to provide the tools and

knowledge to handle distressed properties, including short sales, deeds-in-lieu, Home Financing

modifications, forbearance, refinances, reinstatements, government programs or other options.

After completing a comprehensive live or online course, graduates are awarded the Certified

Distressed Property Expert

® Designation.

About the CDPE Designation

The CDPE Designation provides real estate industry professionals with detailed information on

how to engage with and assist homeowners in distress. The CDPE designation has been

endorsed by RE/MAX International, Keller Williams Realty and other major U.S. brokerages, as

well as industry icons such as: Dave Liniger, chairman and co-founder of RE/MAX; Allen Chiang,

Chairman of the Asian Real Estate Association of America (AREAA); Steve de Laveaga, Senior

Vice President of Fidelity National Title; and Tino Diaz, Chairman and President of the National

Association of Hispanic Real Estate Professionals (NAHREP).

For more information about the Distressed Property Institute and the CDPE Designation, visit

www.cdpe.com

ihttp://www.usdoj.gov/opa/pr/2009/April/09-opa-311.html

ii

 

http://www.fbi.gov/pressrel/pressrel09/mortgage_070709.htm

iii

 

http://www.ftc.gov/opa/2009/07/loanlies.shtm

iv

http://www.freddiemac.com/singlefamily/news/2010/0412_payoff_fraud.html

 

http://www.freddiemac.com/singlefamily/news/2010/0412_payoff_fraud.html

http://www.freddiemac.com/singlefamily/news/2010/0412_payoff_fraud.html