by Calculated Risk on 10/16/2013 12:00:00 PM

The key problem with short sales is fraud. There are many types of short sales fraud (money under the table, agents not actually marketing property, etc.), but this was apparently blatant.

From the LA Times: BofA employee accused of taking bribes to rig short sales (ht Brian)

A Bank of America Corp. employee assigned to deal with delinquent mortgages has been arrested on federal charges of accepting more than $1 million in bribes to allow homes to be sold far below their market value.
...
A 28-count grand jury indictment, unsealed Tuesday, listed 18 properties allegedly sold in late 2010 and early 2011 at prices below those the bank would have approved. ... Most of the homes were in the San Fernando Valley, but others were in Corona, Coto de Caza, Beverly Hills and Bel Air.

“The buyers would either resell the homes at the actual property values or in some cases would refinance the property at the actual value, thereby extracting profits on the deals,” [Ariel Neuman, an assistant U.S. attorney in Los Angeles] said.

I'm shocked.