There has been much in the news recently about the current practice of house flipping – that is, investors who buy properties as they are being foreclosed on the courthouse steps, make some improvements and within a few weeks sell for a profit (Press Democrat “Flipping Foreclosed Houses,” December 26, 2010). After that article was published, several angry letter writers expressed their opinions that those involved in the house flipping business are greedy, immoral, dishonest, opportunistic, and much worse.

This is the first in a series of blogs that seeks to dispel some of the myth and misinformation that is rampant, as well as put into perspective some of the issues raised in the Press Democrat article and subsequent editorial and letters to the editor.

The biggest failing of the article, in my opinion, was to perpetuate the idea that investors (flippers) are responsible for the fact that these homes are being sold at auction. The article focused on a few instances where the homeowners seemed genuinely surprised that they were losing their homes, only to be thrown out on the street by the new owner.

In fact, in the overwhelming majority of cases, the homeowners are aware that a sale date (i.e., foreclosure date) is looming. The homeowners likely have not made any payments in many months, and by law would have received certified letters advising them of the coming foreclosure date. I fully understand that some lenders have not acted honorably or responsibly during the foreclosure process, and I make no excuses for any of them – but to imply that an investor/flipper has anything to do with that process is absurd.

People lose their homes for any number of reasons, as the Press Democrat editorial (“Flipped,” December 29, 2010) correctly stated. But to draw the conclusion that investors are hovering like hyenas waiting to feed on the misfortune of others is just too much of a reach.

In my next blog I’ll explore the process of buying foreclosures at auction, and the risks taken on by the investors.

Your comments and questions are welcome. These are important issues and I invite a dialogue on all sides of the table.

Posted by:  Deborah Byrne