Re: FLIPS- a solution - Posted by Bill in OR
Posted by Bill in OR on May 24, 2001 at 14:32:49:
All of this paranoia is over the FRAUDULENT flips…those that are performed by crooks who happen to work together to commit a fraud on the ultimate financier (fha, fnma,fhmls, etc). Borrower, appraiser and lender work together to make these fraudulent flips come true.
Too bad, but ALL flips now seem to be lumped into the same “fraud” pile, even though is unlikely that fraud has occured in most quick-turn sales.
So, how do we manage the over-reaction?
An owner is free to place his property into a land trust. The Trust agreement cleary sets forth that the grantor is the beneficial owner of the trust. Owner tells the lender about the transfer, explaining that prudent asset protection compels this transfer, not to mention estate planning benefits.
This is not a “flip”.
Subsequently, owner assigns/sells a beneficial interest in the land trust to a 2nd party. There is no public transfer of deed, etc…only a transfer of a portion of the owners “private property” interest in a land trust.
The deed has not been transferred.
Did an illegal flip occur? No.
2 months/days/years following the assignment, the property is sold to Party #3. Deed is from Trust to party #3. Any illegal flip here?
After closing, the trust beneficiaries (owner and party #2) divide among themselves the proceeds of sale, according to their previous agreement (per the co-beneficiary agreement). The terms of that agreement is whatever the two of them negotiated. It’s private and known only to the 2 beneficiaries and the Trustee.
Of course, this is only a variation of the possibilities.
Bill Gatten’s PacTrust covers the details and “how-to” stuff in detail.