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Flipping Property flipping is nothing new; however, once again law enforcement is faced with an educated criminal element that is using identity theft, straw borrowers and shell companies, along with industry insiders to conceal their methods and override lender controls.
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Property flipping is best described as
purchasing properties and artificially inflating their value through false
appraisals. The artificially valued properties are then repurchased several
times for a higher price by associates of the "flipper." After three or four
sham sales, the properties are foreclosed on by victim lenders. Often
flipped properties are ultimately repurchased for 50 - 100 percent of their
original value.
What makes property flipping illegal is that the appraisal information is fraudulent. The schemes typically involve one or more of the following: fraudulent appraisals, doctored loan documentation, inflating buyer income, etc. Kickbacks to buyers, investors, property/loan brokers, appraisers, title company employees are common in this scheme. A home worth $200,000 may be appraised for $280,000 or higher in this type of scheme. |
