Everyone is aware of FHA's Property Flipping Rules.   Today I was approached to do a Conventional Loan for the buyer instead of FHA because of the FHA Flipping Rules.  I would generally avoid transcations like this however it peaked my interest based upon FHA Rules.

The following are sections of Fannie Mae Selling Guide. (See pages 101 -102).   The transaction I am being asked to do would be equivalent to a Simultaneous Closing of the purchase by a Third Party that is negotiating a Short Sale on the current loan.  They then wish to resell the loan to the borrower I am working with.  Should I look at this as a

"Types of Fraud - Diversion of sales proceeds"

and would only be possible with

"Lender Fraud-Prevention Measures - Modify closing instructions to prevent flips without lender consent."  

My opinion is that only after the current Lender consent or they had released their Lien could I look at the Transaction. 

Any One have any Opinion? 

Types of Fraud

There are a variety of types of mortgage fraud. These include:
• Undisclosed liabilities
• Misrepresentation of income or employment
• Misrepresentation of credit
• Identity theft and/or Social Security number discrepancy
• Misrepresentation of assets
• Misrepresentation of occupancy
• Misrepresentation of property value
• Property flips based on inflated appraisals or other false characteristics
• Misrepresentation of the subject property characteristics or comparables
• Sale of fraudulent loans or double selling of loans
• Mishandling of escrow funds or custodial accounts
• Diversion of sales proceeds

Lender Fraud-Prevention Measures

 

Fannie Mae works closely with lenders to combat the growing problem of fraud in the mortgage industry. Fannie Mae assumes that the information and processes on which loan decisions are based are honest, accurate, and credible, and that lenders are striving for information and process integrity at every stage in the life of a mortgage-from application through servicing. To prevent and detect fraud, it is critical that lenders know their business partners, aggressively sample their loan populations, carefully review transactions, and consider using outside resources. Specifically, lenders must:

• Have proper hiring practices in place, including careful reference checks.
• Aggressively sample loans that have a high risk for fraud as part of the quality control process. This includes loans that are early payment defaults or that involve problematic business sources, loans in high-risk areas (such as areas with high levels of early delinquencies or defaults), or those that have characteristics in common with previously detected fraudulent transactions.
• Evaluate appraisers and get references. Confirm that the appraiser is currently classified and has not been the subject of disciplinary action.
• Be selective in choosing closing attorneys and settlement agents, and communicate concerns about suspicious files to these individuals.
• Modify closing instructions to prevent flips without lender consent.
• Report suspected fraud to proper authorities.
• Report suspected fraud to Fannie Mae.