Flopping is the New Flipping

CNNMoney informs MHProNews the tripling of short sales in the last three years has led to banks being overloaded with requests, which has spawned a mortgage fraud called “flopping.” An underwater borrower gets the lender to agree to a short sale. The seller then “doctors” the house with offensive smells, removes cupboard doors and appliances, paints the ceiling to imitate water stains, produces invented repair estimates, discouraging buyers, and proving to the lender the price is deflated. An accomplice then buys the house at a lower price, cleans it up and sells it for a 34 percent profit–on average, according to CoreLogic. Investigating bogus repair estimates can be complicated and time consuming. While less than two percent of all short sales in 2011 were suspicious as a result of being flipped the same day, the average profit was $55,000.

(Image credit: floridaforeclosuredefenselawyers)

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