The Next Crime Of Real Estate Investors

The Next Crime Of Real Estate Investors

The Next Crime Of Real Estate Investors
By: Bryan Ellis

To be clear, I do not think real estate investors are criminals (as a whole). To the contrary: The involvement of real estate investors is and forever will be a central key to the recovery of our real estate market and the economy as a whole.

That’s why it’s so frustrating that the Obama administration (including his appointees) is so clearly extending their campaign against profits from just big businesses all the way to individual real estate investors like you.

Case in point: Neil Barofsky, Special Inspector General of the TARP fund, recently identified what he characterizes as a “scheme” that will result from recent changes to the “Making Homes Affordable” program: Short sale “flopping”. Flopping refers to the acquisition of a short sale property by using deflated values and involving straw purchasers to facilitate a resale.

Sound familiar? It’s yet another attack on the A-B-C short sale flip strategy, similar to the one that Freddie Mac initiated a few days ago, in which a publication from the mortgage lending giant categorized the traditional A-B-C short sale flip as mortgage fraud.

Do you think you’re committing fraud by performing an A-B-C short sale flip? I certainly don’t. The real estate investor (the “B” party) is providing vital value to the transaction: (1) Negotiating the short sale; (2) Providing funding for the property acquisition; (3) Marketing to find a qualified buyer for the property; (4) Negotiating with the buyer to set a price; and (5) Managing the transaction from end-to-end. This is hardly a “straw buyer” scenario, nor can it be reasonably considered to be criminal or fraudulent.

Yet that’s exactly the stage that the current administration is setting. Simply put: They do not want anyone to be able to profit as a result of any program they create, and they ware willing to criminalize or at least perform character assassination by publicly identifying those who do profit as criminals or hucksters. This means that you as an individual real estate investor are clearly in their sites.

It’s a bad thing, and I don’t like it one bit.

If you think I’m being alarmist, consider this: The Treasury Department (a key part of the Obama administration) sent a letter to Barofsky indicating they intend to run a public service campaign to raise public awareness of mortgage fraud. And remember: the Obama administration considers A-B-C short sales to be mortgage fraud, as made clearly evident through the recent statements/publications from Freddie Mac and Neil Barofsky. This means the Treasury Department’s public service campaign will encourage home owners to think of you as criminally fraudulent.

My friends, this is why I spend so much time focused on political issues even though this is a real estate blog. The simple reality is: Our freedoms are being eroded at a blistering pace. Sometimes it comes through direct regulation (such as the attack on owner-financed transactions perpetrated earlier this year and scheduled to take effect on July 1) and sometimes it’s through a public campaign to categorize your efforts as criminal and fraudulent. This administration, more than any other, is using the same tactics against you as individual investors that they use against their political enemies: Mischaracterization and aggressive deceit.

I hope you’ll remember what’s going on now - and what will continue to happen to our industry - when you go to the ballot box in November




Are there some things that

Are there some things that we will no longer be able to do because of this?


"Nothing in the world can take the place of persistence. Talent will not. Nothing is more common than unsuccessful men with talent. Genius will not. Unrewarded genius is almost a proverb. Education will not. The world is full of educated derelicts. Persistence and determination alone are omnipitent." --Calvin Coolidge

My Journal:

A-B-C Is it considered mortgage fraud? Partner up with me!

I was reading this article and it dawned on me that the impact that this would have on our industry is incredible. What does this mean exactly for our industry? Are they referring to same day close transactions? Someone please clarify this for me. maybe I must be missing something.I hire Bird dogs to find me vacant properties and I have so many that i don't know what to do with them all. View them on my site,

Anyone interested in partnering up on deals, I've got plenty of deals and plenty of funding.

Thanks in advance,

Christopher Armour
Armour Real Estate Holdings


Christopher Armour
ABC Wholesalers

Troubling political statement

If this is Retoric and not fact. Then I will give it no credability. First there is so much freaud that caused this current housing crises so there is a lot of overcorecting flying out there. The problem as i see it is there will be trial and error solutions. An example is the 90 day seasoning that eventually was turned around with restrictions. I certainly do not want to be one of the greedy mongers ther is plenty of money to be maid if we do the right thing. There are many reasons the banks hate the investor, but in the worst case scenario we are perceived as the neccesary evil. And in the Entrepenuer spirit we always adapt and overcome and it has very little to do with a POLITICAL view. Houses have been baught and sold for generations and profit has been made and it will continue. All we have to do is just sit back and ride the storm and readjust. If the powers that be over adjust a slow down of purchases will accur and as in the 90 day seasoning it will correct itself. This is the perfect time to find cash investors who have buying power and want to be a personal bank and reap the rewards.This is the time for inovation in ideas and creativity in moving forward through obsticals . I do not believe it benifis us to label and tell anyone how to vote based on a coment or personal beliefs however it is a time to BENIFIT by CREATIVITY and living the AMERICAN DREAM.

when obsticles occure and they most always will keep on moving forward with new ideas and readjust not end your direction or situation and you will never FAIL..D.


Stay focused on Your Goal

Great article Sissy.

We can only hope that they wont hurt our industry as long as we are doing legal & honest business. time will tell.

Am I becoming a Criminal @ only 2 weeks old?

I've only been in the DG REI program approx 2 weeks. I really do not understand yet most every thing about this Real Estate stuff (only on Chapter 6). It does appear, from what I am reading above, that I am or will be a criminal @ only 2 weeks old. I'm going to follow this link and try to become educated and not have to go to JAIL. I joined to collect my $200 & MORE. I will happily receive any & all comments from any DG REI family members via PM or Email (preferred - posted on my profile page).


2 weeks-- GO DAN GO

If we are going to worry

If we are going to worry about what could happen or what is or isn't gonna happen, we won't have too much success. Get out there and get deals and leave any legal mumbo-jumbo up to the attorneys. Obama (which i'm embarrassed to say I voted for him) and his cronies will continue to screw up the U.S. regardless.

Gov't everything

The feds think they are the ones who can right all things, and at the cost of all our rights, they will try. Usually they are the ones who wre the largest offenders,ie the mortgage melt down a large part of which Fannie, Freddie etc are owed special thanks.

From when?

Hi Everyone!
I just don't understand this. From when people started to use this site for their political agenda? Let's talk about business and stop about preaching your political agenda on this site. This website has been good to so many people for a long long time and don't destroy it. I hate all politicians myself because of the fact they don't deliver what they say during the compain and most of them are corrupted. However, what ever law they come up with i have to follow it PERIOD!!!!!!!

Good luck



Not A Medium For Politics

Please let's leave this site politics free. Love you guys. God Bless.



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"Our lives begin to end, the day we become silent about those things that really matters." Dr. Martin Luther King Jr.

In the news

I have been hearing this in the news for several weeks. I found this blog that summarized what has been in the news.




What about the risk?

The risks involved with flipping a short sale, especially one that's mid construction are vastly high. I posted something about my first deal, and I plan to make 10-15% profit on that deal; but the risk I'm taking is absolutely tremendous. Are they going to start calling credit card companies and hard lenders fraudulent criminals too because they charge interest rates well over 10%? Of course not. We're part of the solution to the risky schemes the banks and politicians put into play back in 1999 by making sure everyone could afford 'THE AMERICAN DREAM' and giving loans to people who the banks normally wouldn't have loaned to in the first place. The billions of $$$ they made, and then the government bails them out like heroes?

They've got their priorities in a knot, and this false recovery is going to slump us back into an even greater depression if they don't watch what they're doing or saying. Jawdropping! Very discouraging to hear. I'm going to call it like I see it. It seems government wants control of everything, and they'll take down anyone who stands in their way. My opinions of course, but nonetheless, the direction I see it heading.


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