Comment from Mike: Woohoo! Also, look at the very last line in the article. It's not just you that is having a problem taking care of your monthly home mortgage!
The Santa Ana-based real estate data firm tracked risk to lenders by examining the number of transactions less than six months after the close of a short sale in which the same property was resold for at least 10 percent more than the short sale price.
A short sale is a transaction in which a lender allows a borrower to sell a property for less than the balance owed on the mortgage.
Such deals have become commonplace in recent years because so many homeowners owe more than their houses are worth.
CoreLogic looked at properties that were sold short and then sold again right away during the first half of 2010.
In some cases, an increased sale price was legitimate because investors rehabbed the property, boosting its market value. In other cases, there were same-day transactions in which homes sold for so much more that they were "suspicious" and possibly fraudulent, according to CoreLogic.
The company assigned various real estate markets a short sale fraud rate by dividing the number of suspicious transactions by the total number of short sales of single-family homes.
Kern County had a short sale fraud rate of 0.84 percent, compared with about 2 percent nationally and 2.5 percent statewide.
"Bakersfield is doing much better than a lot of other markets that have high numbers of foreclosures and short sales," said Frank McKenna, CoreLogic's vice president of fraud strategy.
Los Angeles had a short sale fraud rate of 3.75 percent. Riverside's rate was 2.36 percent, and San Bernardino's was 1.84 percent.
It's not unusual for investors to buy homes when prices are low and sell them later for profit.
Sometimes they fix them up to boost the subsequent sale price, or they may rent them out for a little while until their value rises with the overall market.
That's called flipping, and it's perfectly legal.
What draws the scrutiny of regulators and law enforcement is something called flopping.
That's when someone buys a home for an artificially low price in collusion with bad appraisers, crooked agents or others in a position to manipulate a sale, then almost immediately sells it for it's much higher, true market value, pocketing the difference.
Flopping hurts banks, which are writing off losses unnecessarily, and hurts subsequent borrowers who are charged more to cover the cost of those losses.
"For the most part, investors in Bakersfield are flipping, not flopping," said Gary Crabtree, owner of Affiliated Appraisers and author of a closely followed monthly report on Bakersfield home sales.
But you do see some transactions that smell bad, like a house resold just a few hours after a short sale for as much as $60,000 more, or transactions in which an agent's relative or co-worker gets a house for far less than it's worth, Crabtree said.
RE/MAX agent Theresa Olson said she, too, thinks most local quick turnarounds are legitimate.
"I know that there's not a lot of inventory right now. We're seeing multiple bids," she said. "It's not that far-fetched that there would be flipping in that environment. There are still some good investment opportunities here."
Just about anyone who bought a home in Kern County during the real estate boom will have to sell short if they want to move.
Last month's $139,900 median sale price for Bakersfield area existing single-family homes was down 52 percent from the market peak of $299,925 in June 2006, according to the Crabtree Report.
Nearly a quarter of single-family home sales nationwide are short sales.
Article here.
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