Posted by SueC on May 24, 2001 at 07:58:26:
If you can post where you read this, it would be good for investors to write letters to indicate that not all of us are scam artists and that HUD could be working against its own interest by such a limitation. A cite for your post would be helpful. Thanks!
FLIPS - Posted by MortgageGuy
Posted by MortgageGuy on May 24, 2001 at 06:31:10:
HUD Working on Flipping Rule
The Department of Housing and Urban Development is working on a rule to stop the financing property flips with Federal Housing Administration insured loans. The proposal would make properties that have been sold within a defined period of time ineligible for FHA insurance, a HUD official told MortgageWire. “This would prevent flipped properties from getting into FHA’s portfolio, and in many cases be a red flag to parties in the transaction,” the official said. FHA also is considering changes that would require lenders to use fraud prevention tools to detect flipping. In addition, HUD is drafting a mortgagee letter that will remind loan originators of their responsibility to avoid predatory lending and to protect their borrowers from abusive practices, such as property flipping.
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?
No.
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.
Bill M.
Re: FLIPS - Posted by Kiersten
Posted by Kiersten on May 24, 2001 at 08:35:17:
I’m an originator and we haven’t received this mortgage letter yet. I’ll post when I see it and let you know if it outlines what it’s leading to. I too would like to have the source of that info. Very disturbing . . . .