Now we have a name for it! FLOPPING!

Here is an excerpt from Inman News discussing a certain scheme being perpetrated upon agents and homeowners: See highlights below in blue. (Boy, some things never change... the bad guys keep conjuring up ways to con us.)

Stay on your guard! Remember the old adage "if it seems to good too be true it probably is."

The FBI said that as of April 2010, it had 3,029 pending mortgage fraud cases, 68 percent of which involved dollar losses totaling more than $1 million. The FBI said mortgage fraud investigations totaled 2,794 in fiscal year 2009, a 71 percent increase from the year before and a 131 percent increase from fiscal year 2007.

Emerging schemes include commercial real estate loan fraud, condominium conversions, first-time homebuyer tax credits, bankruptcy fraud, "property flopping" and short sales, property theft and fraudulent leasing of foreclosed properties, tax-related fraud, and the resurgence of debt elimination or redemption schemes.

In "property flopping" or short-sale property-flipping schemes, perpetrators use distressed properties of homeowners who are unemployed or facing foreclosure. They negotiate a short sale with the bank or lender, purchase the property at a reduced price, and flip it to a preselected buyer at a much higher price.

Perpetrators collude with appraisers or real estate agents to undervalue the property using an appraisal or a broker price opinion to further manipulate the price down -- the flop -- to increase their profit margin when they flip the property, the FBI said.

The FBI said some lenders are circumventing the Home Valuation Code of Conduct (HVCC), rules governing appraisals of homes purchased using loans backed by Fannie Mae or Freddie Mac, by using other non-commission employees to order appraisals.

The FBI said regulators and law enforcement officials continue to oppose a waiver of the FHA 90-day property flip rule in effect through Jan. 31, 2011. The waiver "contributes to an ever-increasing pool of potentially fraudulent property flipping schemes as it does not require the seller to have title to the property for a minimum of 90 days," the FBI said.

The FBI said bank-owned (REO) properties are also vulnerable to schemes in which perpetrators file false warranty deeds using false rental agreements and collect advance fees from an unauthorized tenant.

But that's not all the bad stuff that's out there...

The FBI has a whole list of schemes you ought to know about.

 Try this link to the FBI and learn about "Reverse Mortgage Fraud," False Equity Schemes and Foreclosure Rescue Schemes.

We hope you'll do your best to educate yourself along with your fellow Realtors, your friends and neighbors.  Knowledge is the only way to fight these things, so stay on top of it.

Happy sales to you until we meet again.

Jan