Crackdown on Illegal Property Flipping
Both state and federal law enforcement agencies have developed task forces to deal with some of the most pressing real estate fraud scams plaguing today’s society. One of the most common types of mortgage fraud taking place in California is referred to as illegal property flipping.
Illegal property flipping in California typically goes a little something like this - a buyer purchases a property, fraudulently inflates the appraisal, sells to a “straw buyer”, obtains a loan based on the inflated appraisal, pays a fee to the “straw”, makes a few (if any) payments to the bank, “walks” with the money, and leaves the lender with a mortgage for a property that is worth significantly more than the home.
Illegal property flipping costs banks millions and even billions of dollars, since they dole out these loans that go unpaid…loans that they can’t recoup from a new buyer, since the home isn’t worth what they lent.
And because so many players are often involved with (and “in” on) these schemes…typically, the buyer, a “straw buyer”, the appraiser, the mortgage broker, and, perhaps a real estate broker…making sure the right parties are prosecuted can be difficult.
This is why law enforcement is trying to crackdown on this illegal practice. In fact, the FBI has even gone so far as to make this statement - “Those who prey on the housing market should know that hundreds of FBI agents on task forces and their law enforcement partners are tracking down your schemes, and you will be brought to justice.”
