MO 3.0 hours Good Guys/Bad Guys - Who's Who in Mortgage Fraud Course Syllabus
3.0 Elective Hours
Flopping is a form of short sale fraud involving conducting a short sale on a property and then flipping the property in a non-arms' length transaction. Two Florida-licensed real estate agents - one who also worked as a loan officer conspired with a non-licensee to target unsophisticated, low-income homeowners, who were in financial distress and convinced them to sell their houses to a straw purchaser, in a non-arms' length transaction.
For a brief period, the conspirators would pay the mortgage payments but then stopped. They then arranged a short sale of the property from the straw purchaser to one of the conspirators. In that short sale, the lender to the straw purchaser suffered an immediate loss of approximately 80% of the original loan. Then, six days later but using deeds recorded simultaneously, the properties were re-sold to another straw purchaser for approximately 350% more than the short sale amount.
In these deals, the conspirators pocketed the money that should have gone to the original distressed home owner, received the mortgage broker commission for arranging the first straw purchaser's loan, and got the difference between the short sale amount and the new loan. The straw purchasers were all paid $5,000 for their role. In all, this case involved at $1.5 million dollars in loans.
Upon completion of this course the real estate licensee will have a better understanding of residential mortgage fraud including how scammers use short sale fraud to conduct a short sale and then flip the property.