Tuesday, May 8, 2012

"Flopping" - a New Fraud Scheme

Melanie Troutman
Coldwell Banker Mortgage

What's Behind The Blue Door of Real Estate?

The precipitous decline in home values and the distress of homeowners facing foreclosure has given rise to new fraudulent schemes, and one that is currently on the rise is a scheme known as "flopping."  Unlike property flipping, which uses an inflated appraisal to secure a loan for more than a property is worth, property flopping is executed by forcing the sale of a home for less than it is worth and reselling it at its true value.

Flopping schemes can be very elaborate and can involve a number of co-conspirators.  The simplest explanation of the scheme is that "...participants buy a home from an owner who may face foreclosure, at a price well below its distressed value by agreeing to deal with the lender, then immediately resell if for a profit, sometimes to a fellow conspirator."

This is illegal on so many levels and is another reason that a homeowner needs to work with a trusted and experienced realtor.

~ Melanie Troutman

No comments: