Property Flipping and Mortgage Loan Fraud
Mortgage loan fraud comes in many shapes and forms. One form of mortgage fraud that targets home buyers is known as property flipping. Property flipping is particularly common in low income areas.
“Flipping” a property as most people think of it is actually perfectly legal. It involves purchasing a property, making improvements in order to increase its value, and reselling the property within a short period of time. This is known as a “quick turn” sale within the real estate industry. These sales have become a pretty common investment technique, and have even spawned several television programs and books.
Fraudulent property flipping, though, leaves out an important aspect of a quick turn sale. Instead of increasing the value of the home, the scammer makes little or no actual improvements on the property. Also, an appraiser, who is often in on the scam, values the property for much higher than its actual worth. When the victim unknowingly purchases the property, the difference between the actual value and the purchase price is pure profit for the scammers.
In order to avoid being a victim of a property flipping scam, you should always hire an independent appraiser to determine the value of the property you are thinking about buying. In today’s unstable real estate market, it is hard to know how much a piece of property is worth. If you are afraid that you have been a victim of a mortgage loan fraud, consult a lawyer. An experienced real estate attorney can let you know your rights and responsibilities, and recommend a course of action.
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Last Modified: 12-15-2010 03:37 PM PST
