What distinguishes a flopping scheme from a flipping scheme in mortgage fraud?

In mortgage fraud, understanding the distinction between flopping and flipping schemes is crucial. A flopping scheme specifically involves the initial property value being deflated in the first transaction. This typically happens when a property is sold at a significantly lower price than its actual market value. The purpose of deflating the price is to create an artifice where the property can subsequently be sold again at an inflated price, often to an unwitting buyer or investor. In this context, the flopping scheme allows the fraudster to profit from the difference as they manipulate the perceived value of the property.

Conversely, flipping schemes usually involve taking a property and improving it or marketing it in a way that allows it to be resold at a higher price shortly after purchase. While flopping focuses on taking advantage of a deflated price in initial transactions, flipping relies on actual market improvements to boost property values.

This fundamental difference is a critical element in recognizing and understanding the mechanics of fraudulent schemes within real estate financing. The specific detail of deflating the property’s initial transaction value is what clearly sets flopping apart from other real estate transaction schemes, including flipping.