Flipping Fraud: Is It Really Any Different From What the Banks Are Doing?

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Always consult with a licensed attorney regarding your specific situation.

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What Is Flipping Fraud?

Flipping fraud occurs when a deed is fraudulently executed in the name of someone who doesn’t actually own the property—and then that deed is sold to a third party.

Because banks themselves often struggle to prove clear title in foreclosure cases, opportunistic scammers have found ways to mimic the same playbook, profiting by selling property they don’t own.

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Case Example: ___________ v. Stonecrest Financial

In one 2017 case, U.S. Bank—after losing its own unlawful detainer (UD) action years earlier—sold a deed it did not own. That deed was funneled through an anonymous LLC (Holly Hill Investments, LLC) and marketed internationally by its affiliate, Stonecrest Financial.

Stonecrest openly advertised that its “sales are robust from acquiring properties with title and occupancy issues.” The problem?

• There were no title issues until they recorded their fraudulent deed.

• There were no occupancy issues until they went to court—often by ex parte hearing—abusing outdated landlord-tenant laws to force homeowners out.

Once the fraudulent deed was recorded, the scheme escalated quickly:

1. The fake deed was used to secure a bridge loan from investors (often off-shore).

2. The “loan” was framed as funding for renovations.

3. The property was sold again at double the original fraudulent price to a so-called “bona fide purchaser.”

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Red Flags for Flipping Fraud

If you see any of the following, proceed with extreme caution:

• Seller very recently acquired the title.

• No real estate agent is involved.

• Property was recently in foreclosure or sold for an unusually low price.

• Appraised value is understated on the bridge loan but inflated at resale.

• Appraiser uses other fraudulent flips as “comparables.”

• Cosmetic improvements are used to justify large price increases.

• Straw borrowers are inserted to mask the real parties in interest.

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Why This Looks Familiar

This scam closely mirrors the foreclosure playbook used by big banks.

• Banks use institutional-sounding names (e.g., “US Bank as Trustee”) to imply legitimacy, even though the trusts don’t exist in any real sense.

• Lawyers file foreclosures in the trustee’s name, even though those trustees have no powers, no knowledge, and no financial stake in the loan.

• The actual “client” is a sub-servicer, itself just following instructions from hidden intermediaries.

• The only “witness” is typically a robo-witness from the sub-servicer—not from the bank, not from the trustee, and certainly not from any creditor who funded the loan.

The pattern is the same: use paperwork to create the illusion of legitimacy, while the real financial players remain invisible.

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Bottom Line

Whether it’s labeled as foreclosure or property flipping fraud, the underlying scheme is identical:

• Fabricate documents.

• Hide the real parties in interest.

• Profit from transactions that never involved a legitimate creditor.

For homeowners, vigilance is critical. If you spot red flags in a property transaction—or if a foreclosure claim is being pushed by an entity hiding behind layers of trustees and servicers—challenge the paperwork, demand real proof, and consult with experienced counsel immediately.

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Posted in Fabrication of documents, foreclosure defenses, Motions |