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Flipping Fraud: Is It Really Any Different From What the Banks Are Doing?

by Neil Garfield | November 21, 2018

Hat tip to one of our readers and client.

Flipping Fraud: the act of getting a deed executed in the name of someone who doesn’t own the property and then selling the deed to a third party.

Given the fact that ultimately when pushed to the wall none of the banks can actually prove title with facts, tricksters have discovered a huge doorway in which they can profit by selling property that they don’t own just like the banks do.

I am quoting his article as written:

One kind of property flipping fraud occurs when a deed is purchased for pennies-on-the-dollar from a party who did not have good title or possession, in this case (as in ____________ v. Stonecrest Financial) in Oct. 2017 from U.S. Bank who had lost their own UD action over 5 years prior, and then sold the loan (minus the underlying debt they never owned) [e.s.] back to Countrywide (Bank of America). The perpetrators, using an anonymous LLC, Holly Hill Investments, LLC, advertise internationally through their RICO affiliate, Stonecrest Financial, that "sales are robust from acquiring properties with title and occupancy issues." However, there are no title issues until they record their fraudulent deed; and there are no occupancy issues until they go into court, often by ex parte hearing, to avail themselves of the archaic unlawful detainer landlord tenant laws. Often their investors are off-shore money launderers, who get their money back right away when the perpetrators immediately use the fraudulent deed to encumber the property with a house-flipping bridge loan to allegedly to fix up the property. The scheme culminates with the property then being sold to a "bona fide purchaser" at often double the price paid for the fraudulent deed.

Red flags for this kind of illegal property flip include:

  • Seller very recently acquired the property title
  • No real estate agent is used
  • Property was recently in foreclosure or acquired at a low price
  • Appraised value is understated on the immediate bridge loan and stated at the higher value upon sale.
  • Appraiser frequently uses other property flips as comparisons

Property flipping fraud also occurs more frequently when a property is purchased and resold at an artificially high price, usually after making only a few cosmetic improvements. Straw borrowers are often used in these transactions.

The only thing I would add is that this scheme is using the bank playbook. They use institutional sounding names to make it seem real. That is exactly what happens when they use a big name as Trustee of a trust that never existed and will never get the proceeds of sale on a foreclosed home. The cases all name Deutsch or BofA or US Bank as claimant when those banks are not making any claim at all. The lawyers never talk to the so-called trustee who doesn’t have any trustee powers. The lawyers represent a self serving subservicer who is following the directions of other intermediaries. And the only witness comes not from the claimant but from this remote entity calling itself a servicer.

 

 

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Back to November 2018 Archive

 

"CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea–it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-CFLA (2352) for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online)".

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