HUD’s Government Insured Mortgages: The Problem of Property “Flipping” – Part II

HEARING BACKGROUND

Mortgage Fraud “Flipping”
June 29 & 30, 2000 at 9:30am
342 Dirksen Senate Office Building
Permanent Subcommittee on Investigations

   These hearings will examine the nationwide crisis of mortgage fraud which is commonly known as “flipping.” “Flipping” is an incredibly complex phenomenon in which multiple parties conspire to defraud home buyers, lenders, and – in the case of loans insured by the Federal Housing Authority – the federal government. The practice of mortgage “flipping” – where individuals (“flippers”) sell homes at artificially inflated prices – creates the false illusion of a robust real estate market through the use of phony paperwork and deceptive sales pitches. The Subcommittee’s investigation found that flippers have purchased hundreds of rundown houses and resold them – sometimes within hours – to unsuspecting, unsophisticated buyers. Buyers pay inflated prices and high mortgage payments often result in foreclosure, abandonment, or bankruptcy. Buyers are left with their credit ratings tarnished and neighborhoods are left with boarded-up houses.