A real estate scam that's flipping the industry upside down. A warning on how you can protect yourself from becoming a victim of property flipping. Con artists are duping banks and homeowners by purchasing and selling homes but it is how they do it that makes it illegal.
The scammers purchase a fixer upper, false;y appraise it for top dollar and then quickly sell without any repairs. What makes this illegal is the inflated appraisal value and that's why state and federal agencies are cracking down with new regulations. The federal housing administration issues a mortgagee letter, that calls for requirements to protect you as a homebuyer. The first requirement, no-party can re-sale a piece of property within the first 90 days ownership and any resale within the first 180 days will require a second appraisal on the property. It's a law aimed at provoking honesty and some lenders have set regulations too. Starkey Mortgage Manager Anne Dicken says, "when we do a loan it is our requirement that we get a 12 month chain of title on the property we are with the concern of our borrower from a mortgage point of view, if the borrower purchases the property and it is over inflated and for some reason we have to take it into foreclosure then we end upside down."
Your dream of homeownership doesn't have to be preyed upon, you can prevent a flipping scheme by hiring your own appraiser and researching property values with a local real estate agent. If this has happened to you or someone you know you can report this to your local mortgage company.