Industry News

Property flips targeted in HUD real estate sales

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The U.S. Department of Housing and Urban Development needs to crack down on investors who are abusing a federal preforeclosure program to buy houses at below-market value then quickly resell or "flip" them for profit, according to an audit released in mid-September. "Investors abused the (HUD) preforeclosure sale program and obtained properties below fair market value...then resold (the properties) almost immediately at an increased sales price," the report, performed by Joan Hobbs, a HUD regional inspector general for audit, said. Investors are violating HUD rules to obtain properties at a lower price, the report said. They do so by relying on undervalued appraisals based on inaccurate or inappropriate comparable sales data, by neglecting to market properties to get a fair price and by not telling borrowers how to get a fair market price, the audit said. The HUD Homes Program resells tens of thousands of foreclosed homes each year. Because of a lack of adequate controls by HUD, the d...