Is property flipping illegal?
Property flipping – buying a house, fixing it up and selling it for more than the original purchase price – itself is not illegal. However, when the owner uses false appraisals and fraudulent loan documents, he has crossed the line into illegal behavior. As an example: a person buys a property for $100,000 and has it fraudulently appraised at $200,000. The person then sells the property for $200,000 to a “straw buyer” who gets an 80% loan from a lender (a $160,000 loan). The subject pockets the difference between the original purchase price he paid and the loan proceeds he received ($160,000 – $100,000 = $60,000 profit). The bank eventually repossesses the home and is left with a $160,000 mortgage on a $100,000 house. If the loan was FHA-insured, the government absorbs the loss.
Related Questions
- Is it illegal to abandoned or keep vehicles (inoperative, dismantled, or wrecked) on private property (other than at the business of a licensed dismantler or a licensed junkyard)?
- I received a Warning of Impending Padlock letter stating there is a complaint against my property of illegal commercial and/or manufacturing uses. What should I do?
- Is it illegal for CCTV cameras to be pointed onto our property?
