Property flipping refers to purchasing real estate and then quickly reselling it for a profit.
Fraud-for-profit property flipping charges arise when a recently acquired property is thought to have been resold with an artificially inflated value. This type of property flipping is illegal because the property is sold at this higher value due to a false appraisal or other fraudulent loan documents, or the involvement of “straw buyers”
There are several financially viable and legal ways to "flip" a property through research, repairs, and refinancing.
It can be difficult for real estate investors to legally flip a property due to the Prohibition in Property Flipping in HUD's Single Family Mortgage Insurance Programs, which requires the following criteria:
Real estate wholesaling properties resold within 90 days of their last purchase are ineligible to receive financing through FHA mortgages using HUD covered insurance;
Real estate wholesaling properties resold between 91 and 180 days of purchase must have documentation of the resale value when that value is a certain percentage (between 50 to 150 percent) higher than the previous purchase price; and,
Real estate wholesaling properties resold between 91 days and 12 months of its last purchase must have additional documentation of the property's value when the resale value is 5% or more than the property's lowest sales price in the last year
Exceptions to the above rules include:
The resale of a property purchased for the relocation of an employee by that employee's employer;
The resale of HUD real estate owned property; and,
The sale of a newly built home by the builder
While property flipping is the most common form of Mortgage Fraud, legal property flipping can be a potentially lucrative pastime, and can also encourage the renovation of a neighborhood in need of revitalization. However, there are risks associated with all types of property flipping, including possible charges of fraud.
Are you facing accusations of illegal property flipping? If so, the property flipping lawyers at The Blanch Law Firm can help you understand your rights and construct an effective strategy for your defense.
Contactone of our experienced attorneys today by calling 888-984-5579 . Your initial consultation is both free and confidential.