The HUD Rule Prohibiting Predatory Property Flipping with FHA Loans

The U.S. Department of Housing and Urban Renewal (HUD) defines predatory property flipping as: "the practice whereby a property recently acquired is resold for a considerable profit with an artificially inflated value, often abetted by a lender's collusion with the appraiser." And on June 2, 2003, HUD imposed a rule that places time restrictions on the resale of properties financed by Federal Housing Authority (FHA) loans. This was done in an effort to try to curb predatory lenders and dishonest real estate investors from ripping off unsuspecting home-buyers by reselling or flipping properties at artificially inflated sale prices. However, as far as I am concerned, the only thing that this rule has accomplished is to stop honest investors from using FHA loans. I suspect that crooked investors, appraisers, and lenders are still using FHA loans to perpetrate fraud; they are just using more sophisticated scams, which HUD has not caught on to yet! For a detailed explanation of HUD's rule against predatory property flipping, log on to the following web site: www.florida.ctic.com/bulletins/2003/2003-03.pdf

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Real Estate 101

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