CURRAN ANNOUNCES FLIPPING/PREDATORY LENDING INITIATIVE
Baltimore - Attorney General J. Joseph Curran, Jr., announced his initiative to combat the deceptive real estate practice known as flipping/predatory lending at a press conference in Baltimore earlier today. Baltimore City community leaders, members of the Maryland General Assembly, and housing and lending experts were on hand for the Attorney General's announcement.
"Flipping is a very serious problem plaguing urban neighborhoods throughout the state," Attorney General Curran said. "The number one way to attack this problem is to educate people in every targeted area. If that means going into each and every community, then that's what we'll do."
Attorney General Curran unveiled a three-pronged initiative that pools the resources of the public and private sectors to most effectively attack the problem by informing potential home buyers of the warning signs of flipping. Curran unveiled a public service announcement that will air statewide, as well as a series of town hall meetings to be held in the areas hardest hit by flipping. Curran's office also developed a brochure to guide home buyers through the process and offer help to those who have already bought a home and think they may have been victimized.
Flipping usually occurs when a real estate investor buys a house cheaply, makes cosmetic repairs, and then sells it to an unsuspecting home buyer for a price that far exceeds its real value. The flipper targets first time home buyers who believe they cannot afford to buy a house or qualify for a mortgage loan. He then gets the buyer to trust him by promising to put the buyer in a house and arrange a loan, even if the buyer has bad credit or little money. But to make this inflated sale work, the flipper and mortgage company need to get a false appraisal that misrepresents the value of the house, and often commit fraud or deception in the processing of the loan. The buyer winds up with a house that is not worth the sales price and with a loan that they cannot afford to pay. Too often, the buyer goes into default and soon loses the house in foreclosure.
"The buyer isn't the only victim," Attorney General Curran warned. "The Coalition to End Real Estate Practices has documented the vast number of foreclosures that have resulted from flipping, and found that the neighborhood was left with inflated housing values, but vacant or unstable housing. Flipping is a cancer on our neighborhoods and we must work together if we are going to save them."