by John Alexander
Home of the Inverse Purchase® Technique
Homes are Flipped everyday in America, even Fannie Mae "flips" homes, and they flip hundreds at a time. All investors by default "flip" homes. Some are flipped in months, some weeks, some in minutes. An investor buys at a lower price and sells at a higher price as quickly as possible. That's a Flip. And it's legal if no fraud is involved.
Like anything, there is a legal way to do business and an illegal way.
In the real estate industry, a both legal and illegal method of doing transactions exist and is wholly dependent on the type of individuals involved in the transactions; crooks vs. good guys.
Fannie Mae, the nation's authority on real estate transactions provides definitions of both legal and Illegal Flipping. Fannie Mae's legal counsel has issued their definitions of Legal Flipping verses Illegal Flipping (also known as Predatory Flipping) as follows:
Ref: From: Fannie Mae Newsletter: Dec 2005... Legal Counsel for
FNMA states:
‘Property flipping generally refers to purchasing existing properties with the intention of immediately reselling the properties for a profit. It is not illegal per se. When, however, an immediate resale is accompanied by acts of fraud or misrepresentation, including but not limited to appraisals with inflated property values and other misleading or fraudulent documentation, it can result in fraud’.
For more detail on the differences between legal and illegal Flip's visit this Fannie Mae web page.
CLICK HERE
The real cause behind Illegal Flipping.
95% of all Illegal Flipping could be easily controlled if the lending institutions wanted to spend an extra $40.00 per transaction and order a simple BPO.
Most all investors do legal deals and are a key to keeping the home market flowing smoothly including buying up the massive number of foreclosures now sitting on the lender books, and will flip them for a profit.
Unfortunately, any investor can take any real estate method and pervert it by adding criminal acts to it. While responsibility for criminal acts fall directly upon the person doing the act, within the industry, there are preventive measures that would solve many of the problems cause by illegal flipping. Therefore, it also becomes the responsibility of the lenders to insure no illegal acts are committed during the loan process. New York passed such a law for their state.
Sadly, the lending industry has not instituted simple procedures such as lender controlled appraisal and Identification verification systems. These Middle Man oversight positions are key to eliminating this type of crime.
Under the current system, criminal type mortgage brokers provide business to "friendly" appraisers who in turn, inflate prices. They take in loan applications from buyers that have been "coached" on how to falsify the loan applications, or worse, the mortgage broker "fixes" the application. Buyers, Investors, brokers, agents, and appraisers often have been found guilty of conspiracy in illegal flipping rings.
There also needs to be a Borrower Identity Verification System in place controlled by the lender, not the mortgage broker. There should be another set of property valuation and identity verification at the point where FNMA or other federally administered purchaser of mortgages, accepts them into their portfolio.
To find out more about the differences between illegal flipping and legal flipping read the definitions put out by
FNMA at this link.
Like anything, there is a legal way to do business and an illegal way.
In the real estate industry, a both legal and illegal method of doing transactions exist and is wholly dependent on the type of individuals involved in the transactions; crooks vs. good guys.
Fannie Mae, the nation's authority on real estate transactions provides definitions of both legal and Illegal Flipping. Fannie Mae's legal counsel has issued their definitions of Legal Flipping verses Illegal Flipping (also known as Predatory Flipping) as follows:
Ref: From: Fannie Mae Newsletter: Dec 2005... Legal Counsel for
FNMA states:
‘Property flipping generally refers to purchasing existing properties with the intention of immediately reselling the properties for a profit. It is not illegal per se. When, however, an immediate resale is accompanied by acts of fraud or misrepresentation, including but not limited to appraisals with inflated property values and other misleading or fraudulent documentation, it can result in fraud’.
For more detail on the differences between legal and illegal Flip's visit this Fannie Mae web page.
CLICK HERE
The real cause behind Illegal Flipping.
95% of all Illegal Flipping could be easily controlled if the lending institutions wanted to spend an extra $40.00 per transaction and order a simple BPO.
Most all investors do legal deals and are a key to keeping the home market flowing smoothly including buying up the massive number of foreclosures now sitting on the lender books, and will flip them for a profit.
Unfortunately, any investor can take any real estate method and pervert it by adding criminal acts to it. While responsibility for criminal acts fall directly upon the person doing the act, within the industry, there are preventive measures that would solve many of the problems cause by illegal flipping. Therefore, it also becomes the responsibility of the lenders to insure no illegal acts are committed during the loan process. New York passed such a law for their state.
Sadly, the lending industry has not instituted simple procedures such as lender controlled appraisal and Identification verification systems. These Middle Man oversight positions are key to eliminating this type of crime.
Under the current system, criminal type mortgage brokers provide business to "friendly" appraisers who in turn, inflate prices. They take in loan applications from buyers that have been "coached" on how to falsify the loan applications, or worse, the mortgage broker "fixes" the application. Buyers, Investors, brokers, agents, and appraisers often have been found guilty of conspiracy in illegal flipping rings.
There also needs to be a Borrower Identity Verification System in place controlled by the lender, not the mortgage broker. There should be another set of property valuation and identity verification at the point where FNMA or other federally administered purchaser of mortgages, accepts them into their portfolio.
To find out more about the differences between illegal flipping and legal flipping read the definitions put out by
FNMA at this link.
Is Flipping Homes Legal?
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