How legal is this...

I have heard of a title company making deals where a guy will find an investor willing to purchase RE. The guy finds bank owner properties going for 50K and has a title company put his name on title Making it look like the guy is the owner so a lender will fund the investor 100K. Once the deal has been done on that end the title company will cut the guy a check to go buy the deed form the bank which is the real owner. After the deed is hand the first title will record the deed so the chain of title is in order. The guy walks away with 50K. And gives the investor 10K for putting it in his name. Does this work and if so is it Wrong. Please advise.

It won’t be long before one of the lenders catch up with this and a few people will see time behind bars for something this blatant.


Sean, what if I was to do the same thing but buy the house cash instead of the title comp putting my name on it. Can the deal work then legit. Or will I have to season the home first or do you have lenders that overlook that.

There are a few ways to approach flips.

  1. Conforming lenders often use a common sense approach to underwriting that looks at the sale price of each transaction over the trailing 12 months and if the difference in sale price isn’t significant they allow the transaction without further documentation.

  2. Arbitraty numbers for ex purposes. You buy the home for 32,000 and after some improvement you find a buyer for 58,000. If you can show a conforming lender documented improvements that helps bridge the gap, then they will allow the transaction - they appraisal will be reviewed tightly, so make sure you have good close comps of matching construction and age - loose appraisale won’t fly here.

They don’t usually have a written rule on this, but from what I’ve seen they generally allow you to take 100 - 150% ROI, so in the example the deal would probably fly if you showed them 10,000 worth of improvements. The bank would basically say ok 10,000 dollars in, 16,000 out - makes sense. Before and after pictures help if you’re going to be over 100% ROI - lenders are people and can look at an assest and tell when real improvement has been made

  1. Find a non-conforming (not fannie/freddie) lender with shortened (flip) seasoning. The standard is 12 months, but there are lenders who will do 6 months. Of course, then you would have to tie up funds for 6 months, so financing may be a better option.

The board may have other options, but I have used these methods personally and know them to work.


mtgpro, When I call the Title comp either they have no idea what I am talking about or they say that is illigal.

It is not illegal as long as the true purchase price, purchaser and date are recorded for each transaction. Essentially your title company is saying that is illegal to sell property until you have held it for a year - not the case.

A lot of abuse has heappen recently, much like in urban area in the 70’s where someone would purchase a property for 10,000, put some paint of the walls, cover broker fixtures with disconnected face plates and then have an appraiser grade the home ‘average’ condition at $72,000 when the house was in no way worth anything close to that figure and then retail the house as a fixer-upper.

Banks are much more savvy now - they either will not accept transactions within a 12 mo period or they will only consider it if you can document that some real rehab has been made to the property. Receipt and pictures will make this fly and you can still make some money on it.

If you are looking to retail the properties, the other option would be to put a tenant into a land contract, which will make it much easier for them to acquire the property without cash. You will need them to stay under the land contract for at least a year.

If you just want to sell it to another investor without putting much into the property you would be far better off working a sub2 deal, which is not my area of expertise, but there is some interesting stuff out there on the boards.


Thanks for your help Bro. It helps…