What is property flipping fraud?Answer:
Property flipping fraud occurs when someone buys properties for cheap and sells them until two-three times above the real property price is achieved. While there are often a seller and a buyer practicing a property flipping fraudulent scheme, sometimes investors do invest money and time buying a run-down house and repairing it to make some cash on it.
How is the property flipping mortgage fraud done?
A buyer comes to the owner and offers to get their old crappy house they've been trying to sell for years. They shriek with joy and when the buyer asks that the owner just puts an official price of $180,000 instead of $50,000, the owner says "yes". The fraudster then goes to the bank and applies for a loan three times bigger than what they need to actually buy the house. The house is sold, the seller is paid, the buyer disappears. No one is paying the mortgage and the bank forecloses at a loss.
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