When most people hear the word "flopping," they might think of the act of faking a foul in basketball. Flopping is now being used to describe a new phenomenon in which people are committing mortgage fraud across the nation. People are alleged of committing mortgage fraud for a number of different reasons. Those convicted of the crime are believed to have concealed information about their mortgage or home in order to avoid financial losses. In the case of flopping, homeowners are actually attempting to get the lowest possible offer for their homes, but why?
Many people are actually in such a poor state with their mortgage that they actually want a short sale. A short sale is when a lender sells a property in order to put the profit toward forgiving the owner's outstanding balance. This still doesn't exactly explain why a homeowner would want to ruin their home. The scheme goes further. A homeowner, in the case of flopping, typically has an accomplice that is prepared to purchase their home for a low price for the purpose of quickly flipping it back to good enough quality to make a profit on a sale.
Short sales might be investigated if they seem suspicious. There are a number of "red flags" that could trigger an investigation over the possibility of flopping. For example, homes that are short sold for an extremely low price and then flipped the same day would seem incredibly suspicious. An investigation would likely look into any possible relationship or connection between the buyer and the seller. According to one source, those who "flop" their homes typically make a 34 percent gain.
Short sales are not in short supply by any means. This means that floppers can be difficult to detect. The whole point of a floppers tactics is to deter buyers from the home at all. By keeping potential buyers at bay, the accomplices then can quickly purchase the home to flip it for a quick profit. Flopping may also be difficult to discover because many home buyers conceal their identify by purchasing short sold homes under the banner of a limited liability company.
This type of practice is being called outright robbery, but many honest Americans might be wrongly accused of mortgage fraud. If this describes you or someone you know, it is important to contact a federal crimes attorney in your area. Fraud is a serious allegation that must be combatted with a skilled defender on your side.
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