Real Estate Investment Articles

Red Flags of Fraud "Including the "F" Word"

By: Mike Butler

“RED FLAGS OF FRAUD” INCLUDING THE “F” WORD!

News Headline in both newspaper and TV, December 2006 in Louisville, KY
Home Fraudulently Sold – Twice!
By Jessie Halladay, The Courier-Journal (Yesterday)
Couple knew little until arrest of three…..

Here’s the scoop. Back in the late 90’s, money was very loose. If you could breathe, you could borrow money. It didn’t take long for the criminal minds to pounce on this opportunity. While in law enforcement, I was called upon numerous times to assist investigations involving real estate. Believe it or not, in 2001, the Feds were getting ready to just blow the doors off and aggressively pursue investors who were ripping off lenders, homeowners, and consumers. I was invited to participate. But then WHAMMO, Sept 11 happened and law enforcement was turned upside down and Homeland Security went to the front burner. The dust has settled a bit, as far as law enforcement goes; however, the criminals have never slowed down. There are several recent cases locally in my town where investors, attorneys, mortgage brokers, appraisers, and more have been indicted and charged with ripping off lenders and folks in real
estate scams.

PROTECT YOURSELF NOW! Remember this powerful phrase. Ignorance of the law is NOT a get out of jail free card. Here’s some simple no-brainer tips and red flags to avoid as a real estate investor.
NEVER Buy using a Quit Claim Deed
NEVER do “kitchen table closings.” ALWAYS use a “GOOD and REPUTABLE” real estate attorney or title company.
ALWAYS buy Title Insurance when you are buying an investment property. If you are selling a property and you want to sell it real bad…. Be very careful about what you do to help your seller. Many times a loan officer or loan broker will ask a Seller to prepare another form or they may ask you to just sign this form and they’ll say “We Do This All The Time.” If you hear this phrase, you might want to run. (Remember, ignorance is not a get out of jail free card.)
NEVER buy using a “Contract for Deed, Land Contract, or Agreement for Deed.” Once again, always have a professional full blown closing with a real estate expert attorney or title company. Some common schemes seen by IRS criminal investigators include:

“Property Flipping” — A buyer pays a low price for property, then resells it quickly for a much higher price. While this may be legal, when it involves false statements to the lender, it is not. (Now do you really want to say you are a “FLIPPER” or you “FLIP” Properties… the new F word.)
Two Sets of Settlement Statements — FOLKS, This is FRAUD!
Fraudulent Qualifications — Real estate agents assist buyers who would not otherwise qualify by fabricating their employment history or credit record.

Happy Hunting and watch out for these Red Flags of Fraud.
KEEP CRANKING IT 24-7!
Mike Butler

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