Posted by Dons on June 27, 2007 at 15:59:12:
Flipping is not illegal, mortgage fraud is illegal, and mortgage fraud is relatively easier to do during a flip. Thus the crooks have been drawn to flipping, and the newsmedia has had a field day.
Usually mortgage fraud requires an investor, a mortgage broker, and an appraiser to be in cohoots to create the fraud by using false appraisals to borrow more money than the property is worth.
Other scams are the straw buyer scam and the “forgivable” second mortgage…both designed to get money from a lender and into the crook’s hands. These leave the investor/buyer with a property not worth the amount borrowed and the lender with a mortgage on a property not worth the note.