Assignment Deals/Here we go again!!

Assignment Deals/Here we go again!!

Ok, I read the books, read the forums, and purchased the Success Academy and everything pretty much states that Assignment Contracts are legal. Well, when I spoke to my loan officer last night, he told me absolutely NOT. He said it is completely illegal and this is why banks won't fund these types of transactions. I decided to do some researching and spoke with 2 real estate attorneys, a realtor, title co., and loan originators who all told me it was not legal. How can this be? I was also told that you may find a title co. willing to work with you, but over time, you can get caught and go to jail. Yikes!! I wish I wasn't getting so many different answers. What is honestly true?


here we go again

great question! hope we can get a straight answer. i guess it depends on what state your referring to.

*exasperated sigh* "Those

*exasperated sigh*
"Those morons..."

What state do you live in, Kelly? We'll help you get to the bottom of this.



"He who is mighty has done great things for me...He has...exalted those of humble estate; he has filled the hungry with good things..." Matt. 1:49-53

Crazy Advice

Greetings Kelly,

Doing assignments were out before Dean ever wrote any of his books. Dean took the strategy to another level. I would like to find out what state you live in? When some people don't have the answer to your question, instead of being humble enough to tell you that they don't know, especially high professionals like attorney's' they will give you answers like that. Let us know what state you live in?

works for me


Just closed a deal last month here in Ohio doing an assignment. The title company I use is owned by a lawyer. He has done many many closings like this and he says its legal.

It could be the state you live in? I highly doubt it though. Its just these people never heard of it before and don't want to take the time to understand it, therefore don't want to bother with it.

Ask around on this site and see if anyone is wholesaling where you live. If not drive around and call the we buy signs and talk to them. Most likely they are wholesalers like us and can tell you a title company that does assignments.

You are just selling a contract to another investor for a fee. Not the house.
Thats what people don't understand.

Best of Luck,

Jason B


You Can Have and Be Anything you Want!!
Jason Bly (The RE_Situation)

Visit Me at
Push Button Yellow Letter Software-
My how to take Discount Vacations Blog-


or one day theres gonna be one **** of a criminal round up looking for all these criminals who assigned contracts in the last 15 years that i've known people to be doing it....

good grief... i heard an investor on youtube say he spoke to a RE attorney concerning this. the attorney told him any contract is assignable (end of story).real estate or otherwise. he said the attorney told him you dont really have to put AND/OR ASSIGNS. because any contract is assignable..... the reason you put AND/OR ASSIGNS is because you want to legally make sure the other party in the contract with you knows you plan to assign it.

!!!!!! i wish i had the money to ask a lawyer to prove it to me. to show me the state statute thats says you cant assign a real estate contract... !!!!!!!!!!!

i have been hearing this question for years. i've never heard a definitive answer though......


it just seems to me that CONTRACT ASSIGNMENT is legal. but i'm not a lawyer

example CINGULAR WIRELESS SOLD OUT TO ATT. did they ask you to agree to a new contract NO !!! THEY ASSIGNED YOUR CONTRACT.....

OUT OF ALL THE DGER'S doesnt somebody have a family member thats an attorney...

well i've rattled on long enough...

hang in there KELLY


Hi Kelly,

Did one assignment of contract that closed on June 16th, Made $10,000, the title company cut the check and handed it to me, Did 2 in July, same deal. This is in Colorado. I have heard there are a couple of states where assignments are not legal. Don't know if this is true, but I am sure there would be a way around it.
Also, the banks don't care it their buyer has been assigned a legal and binding contract. They will fund it like any other mortgage.
My deals have been with a homeowner directly, I then assigned my contract to my buyer, took the contracts to my title company and closed the deals. No agent, Clean and quick! No wonder they don't like it! What they don't understand is that you are assigning your contract, not selling real estate!

Good luck,
Michael Mangham
MD Home Acquisitions LLC


Knowledge is power, but execution trumps knowledge. Tony Robbins Seller site Buyer site Bird Dog Site Tenant/Buyer site


"Well, when I spoke to my loan officer last night, he told me absolutely NOT. He said it is completely illegal and this is why banks won't fund these types of transactions. I decided to do some researching and spoke with 2 real estate attorneys, a realtor, title co., and loan originators who all told me it was not legal."

Not so much as assignments not being legal, I think they may be referring to banks not accepting contracts with assignments in the case of an REO purchase. If the purchase agreement is worded properly between a buyer and a seller, why should an assignment be illegal. I would press these individuals to cite the grounds on which an assignment is illegal rather than accept a "you can't do that" verbal reply. I would approach it as "So you're the third person who has told me that assignments are illegal. I'm confused. Just for the sake of my own curiosity, can you cite the code or law dealing with the legality of an assignment for me?" Simple as that. I would consider them legal until someone could cite something that concretely proves otherwise. Just because they say it's illegal doesn't necessarily mean it's illegal. They may be confused.

Here we go again is right!

At least once a week we get the same forum topic, same scenerio. If we listened to people that have never done an assignment deal, it would never happen for us. Find a RE agent, lawyer, title company, that have experience in these and don't deal with the ones that haven't. Real simple.
In an assignment deal, you are NOT selling a property. You are assigning the rights of the contract you have locked up.


Every state is a little different, in my state, Rhode Island, there is an assignment clause right in the standard contract. The issue today is that the market is full of REO (bank owned) properties and short sales, which I think will grow. In both of these situations, most banks we prohibit you from assigning. Find an attorney that is familiar with assignments and talk to them. Most real estate professionals are not familiar with assignments, my realtor wasn't. Typically what you can do is a double closing using transactional funding. Make sure you have a strong buyers list and that the property that you put an offer meets their & your criteria!!!

1. Start with a buyers list & qualify them.
2. Get a good realtor and have them help you find properties that meet your buyers criteria.
3. Make low offers
4. Assign or double close to your buyer.


... Verses: 35 "but those who hope in the Lord will renew their strength. They will soar on wings like eagles; They will run and not grow weary, They will walk and not be faint." Isaiah 40:31 ...

Here is my 2 Cents

Hello to all:
It is no longer permitted!!! the government has stated and put into law that since you do not own the asset, you cannot sell or be involved in the facilatation of a sale of real property, aka real estate. They look at it this way. You are not a licensed realtor and since you are not and the majority of those who flip properties
are not, you are not permitted by law to earn a fee or as they call it, a commission.

They have not said being a investor is illegal. They have said that if you want to facilitate such deals that you need to first buy the property in a stand alone transaction and then sell it in a seperate/second stand alone transaction.

I can see it now, many will chime in here and say I am wrong, however I am not. I stay on top of these things all the time. I have to, it is my business to make sure I know whats going on.

Let me say this to you. If all your going to do is find a property and bring someone else in to close the deal and your getting paid for example, a assignment fee of $2300.00, your leaving money on the table. Why would you do all the work on the deal and earn pennies when you could do all the work on the deal, sell it as the owner of record and make $10,000.00 or more.

You still have to get the deal from the seller, you still have to set the deal with the buyer. The only difference is that the buyer is buying from you and not the original seller. This also keeps you from having a buyer try to tell you what you can earn.

I am a transactional funding consultant, This is the business I am in. I enjoy helping investors, new and not so new, make money. Drop me a line if you want to chat or need assistance.

Care to share your info...

Im not saying your wrong, but care to share a link or the source of your information, as you know I will not be the only one to ask you this today.

I would Advise you to look

I would Advise you to look for Attorney's that do Real Estate & Real Estate Title Companies that can help you out if NO Attorney can .

I know I've been told by many Real estate Agents The same thing or they'll claim they don't know .

My thing is Just keep going Until you can Find Someone to Help you out & take on Your Real Estate Deals.

Hell I'm having to Start

Hell I'm having to Start Over with everything Finding A RealEstate Agent , Escrow Company , RE Title Company , & Buyers List . I Already have A Attorney who said he will help me out .

Here is my source(s)

Hello To All:
Here are my sources. Bank of America who has told three clients that the sale of the property procludes them from selling to another party for 30 days.

Wells Fargo who said that the particular property being sold, cannot transfer to another party for 30 days.

Various title companies including Chicago Title who has stated that they will not close transactions where the buyer closing is not the buyer listed on the purchase agreement.

National Association of Realtors, aka NAR, who has stated that it is illegal for anyone not holding a state issued realtors and/or brokers license to engage in the sale of real property for a commission.

Give me till days end to go through all my correspondence and collected information and I will post more.

Thanks for asking me to provide further info.

Here is One More Until Later

You buy a property, you flip it, you profit. Does this require a real estate license? In most cases, the answer is "no". Real estate brokerage is an activity regulated by states on their own terms, thus each state defines which activities require a license. There is a lot of vagueness and ambiguity in some of the state licensing codes, as well as "gray areas", which complicate the matter. Furthermore, if you vary the techniques and your business practices beyond the scope of what I teach in my course, it is not always clear how the state authorities might view your practices. Therefore, this discussion is limited to the simple activity of buying and flipping as follows:

1. Sign a contract with a seller, assign it to a third party

2. Sign a contract with a seller, sign another one with a third party, then double close

The large majority of states use the "for another" language in their state licensing statutes. The "for another" language means the law provides a laundry list of activities that require a license if you do it "for another."

A good example is the Ohio Statute:

§ 4735.01 Definitions. As used in this chapter:

(A) "Real estate broker" includes any person, partnership, association, limited liability company, limited liability partnership, or corporation, foreign or domestic, who for another, whether pursuant to a power of attorney or otherwise, and who for a fee, commission, or other valuable consideration, or with the intention, or in the expectation, or upon the promise of receiving or collecting a fee, commission, or other valuable consideration does any of the following:

The code then goes on to list all types of activity, such as buying, selling, offerings, leasing, negotiating, etc. This type of statute would clearly exempt you from doing any of the listed activity so long as you were doing it on your own behalf. The following court case clearly delineates the difference between acting on your own behalf and acting as a broker.

In Xarin Real Estate v. Gamboa, 715 S.W. 80 (TX 1986), an investor named Xarin entered into a purchase contract with the owner, Gamboa, then assigned his purchase contract to a third party, Baker. When the deal blew up, Baker sued Xarin claiming, among other things, that Xarin was illegally acting as a real estate broker without a license.

The court ruled that, “No evidence exists to show that Xarin was acting for anyone but itself when it sold its interest to Baker. Xarin was shown on the sales contract to be only the purchaser and was not shown in any agency capacity… There is also no evidence that Xarin acted for Baker when Xarin acquired its interest in the property from the Gamboa's. Generally, to establish that one person has acted for another in an normal agency relationship, there must be an agreement between two persons and one must exercise some control over the other.”

Two important points are worth noting here. First, the court acknowledged that Xarin had “an interest in the property” when it signed a purchase contract with Gamboa. As we will discuss later, having “an interest” in real estate allows you to sell your interest, which is specifically exempt from many state licensing laws. Second, the court made an important point that that the Xarin did not have a deal with Baker in place when it made the deal with the owner of the property. This is important because the reverse can also be true; if you make a deal with a buyer first, then find him a property, a good argument can be made that activity is brokering on behalf of the buyer.

Other states that do not use the "for another" language clearly identify specific exemptions in their licensing statutes. A good example is the South Carolina statute, which reads:

"This chapter does not apply to:

The sale, lease, or rental of real estate by an unlicensed owner of real estate who owns any interest in the real estate if the interest being sold, leased, or rented is identical to the owner's legal interest"

However, you must have an interest in the property before you sell it. In general, a contract to purchase property gives the buyer an equitable interest in the land. 27A Am. Jur. 2d Equitable Conversion § 10. Thus, if you have an interest in the property, you are basically exempt from the licensing regulations in these states.

A few states limit the real estate activity of any persons, even if you are acting on your own behalf. SD, MN, WI, MI, MD & MN all have limitations on the number and frequency of real estate transactions you can do before you will need a real estate license. For example, Michigan law limits you to 4 transactions per year, although it is not clear whether using multiple corporate entities will be a workaround.

There's few, if any, reported cases of people being prosecuted anywhere in the country for not having a real estate license. The issue of licensing is more relevant in the enforcement of your profit. For example, if you assign your contract prior to closing and expect the buyer to pay you at closing, he may stiff you and argue "you don't have a license".

The bottom line is that if you don't act like a real estate broker, the state agencies that license brokers will leave you alone. If you use the licensing exemptions to skirt the licensing laws, you will likely hear from the state licensing agencies. It is important that you make it very clear to all parties in the transaction that you are not a broker and are acting on your own behalf.

One More

The number of house flipping shows we see on cable TV today really points to the popularity of real estate flipping. House flipping can be the ideal way to grow one’s investment and even earn a living. However, there are some recent changes in FHA house flipping regulation which can affect how you do business.

These new laws have been created because there are also a lot of awful real estate investors out there trying to rip off anyone investing in flips. There are an inconceivable number of people out there losing their homes these days. So much so that there are now some FHA rules in effect to protect the market.
The new FHA House Flipping Laws are pretty involved understanding however here are the basic points:
Property sold within 90 days purchase won’t be able to get financing with FHA mortgages using HUD insurance.

Those selling a property within 91 and 180 days of purchase must record the resale value if it’s selling for more than the last purchase price.
If the property is selling within 91 days and 12 months of purchase, HUD may require additional documentation of the home’s market value.
With these new rules from the FHA you’ll have some trouble getting buyers for your house flip. It basically means that you’ll need to find buyers for your house flips that aren’t using FHA backed loans. These rules are also commonly referred to as ’seasoning issues’. You’d have to hold the property for at least three months, or let it season before you could sell it to a buyer with financing of this type.

There are only three exceptions to these rules. They are:

1. Selling corporate housing purchased during the relocation of an employee
2. Selling HUD owned real estate property
3. Selling a newly build house

These exceptions don’t typically apply to real estate house flipping, except maybe the HUD owned property. However, there are lots of other buyers using more conventional loans to purchase property.

Why Create these Rules?

In the past few years, The US Department of Housing and Urban Development (HUD) noticed that there were quite a few homes going into foreclosure. Most of these foreclosure homes were owned by first time low income homeowners who had government backed loans from the FHA, VA or Fannie Mae. These are all loans protected by Principal Mortgage Insurance (PMI) which is provided by HUD.
When homeowners lost their homes to foreclosure, HUD ended up covering the remainder of the mortgages through their government backed insurance programs. HUD has passed these FHA house flipping rules to protect these homeowners and themselves from losing money. You can see the rule in a document called, ‘Prohibition of Property Flipping in HUD’s Single Family Mortgage Insurance Programs; Final Rule; 24 CFR Part 203, Doc. No. FR-4615-F-02.’ You can usually get them from the government’s Federal Register Site.

Advice for dealing with Seasoning:
Sell to Buyers Non-Conforming Loans. There are still a lot of other mortgages out there that don’t require or use PMI. These are conventional loans made to buyers who can make large down payments and are more likely to purchase a very nice remodeled house anyway.

Document all costs and profits. Keep all of your receipts and creating a personal record of whom you paid for what and the improvements made to each property.

Lease-to-own your house flips. The FHA house flipping rules only apply to recently purchased homes. Let the buyer lease-to-own the property and you’ll avoid seasoning issues entirely. Since, the homeowner won’t be applying for a mortgage to pay off the property; you don’t have to worry about them being denied because the property was recently purchased.
There are still plenty of ways to flip a house even with these new house flipping rules. These rules help wholesaling investors and HUD by helping buyers keep their homes when they get mortgages.

Related posts
No related posts.

Tags: FHA House Flipping

More Information

Flipping is a term used primarily in the United States to describe purchasing a revenue-generating asset and quickly reselling (or "flipping") it for profit. Though flipping can apply to any asset, the term is most often applied to real estate and initial public offerings.

In the United Kingdom the term is used to describe a technique whereby a Member of Parliament switches his second home between several houses, which has the effect of allowing him to maximize his taxpayer funded allowances.[1]

Contents [hide]
1 Types of flipping
1.1 Multiple investor flipping
1.2 Real estate flipping
1.3 Fix and flip
1.4 Second home flipping
2 Effects
2.1 Bubbles
2.2 Rejuvenation and gentrification
2.3 Property values
3 Regulations
4 Illegal activity
5 See also
6 Notes
6.1 References
6.2 External links
6.3 Published articles
6.4 Television shows
6.5 Books

[edit] Types of flipping
[edit] Multiple investor flipping
Under the multiple investor flip, one investor purchases a property at below-market value, assigns or sells it quickly to a second investor, who subsequently sells it to the final consumer, closer to market value.

[edit] Real estate flipping
Profits from flipping real estate come from either buying low and selling high (often in a rapidly-rising market), or buying a house that needs repair and fixing it up before reselling.

[edit] Fix and flip
Under the "fix and flip" scenario, an investor or flipper will purchase a house at a relatively low price. The discount may be due to the house's condition (i.e., major renovations and/or repairs needed) and in some cases due to the owner(s) needing to sell a house quickly (e.g., relocation, divorce, pending foreclosure). The investor will then perform necessary renovations and repairs, and attempt to make a profit by selling the house quickly at a higher price. In some cases, a dishonest investor will only make inexpensive cosmetic repairs, hiding the house's expensive defects rather than fixing them.

[edit] Second home flipping
In the UK, Members of Parliament are given an allowance to maintain an extra home in London allowing them to live closer to the Houses of Parliament during the working week. Certain costs for this second home can be claimed and are thus partly funded by the taxpayer. Subsequently an MP can nominate any of their properties as the second home, called "flipping", and by nominating each as a second home can obtain further allowances. In some cases, MPs can simultaneously declare one home as their primary residence (for tax purposes) and as their second residence (for expense purposes). Following publication of the MPs expenses scandal on May 15 2009 the practice ended. [2]

[edit] Effects
[edit] Bubbles
Flipping bubbles have historically ended in disaster, such as during the Florida land boom of the 1920s.[3]

In the 2000s, relaxed federal borrowing standards (which included the abilities for a subprime borrower to receive a loan, and for a borrower to purchase a home with little or no money down) may have led directly to a boom in "demand" for houses, thereby affecting the "supply". Since it was easier to borrow, many investors snapped up investment homes without having to put money down. Additionally, since so many investors were purchasing homes, this left even fewer homes available to be purchased by owner-occupants. Since the ones that were placed back on the market by flippers were priced higher than before the flip, buyers again had even less money to put down. This resulted in a continuing circle until finally the bubble burst in 2008 and borrowing standards began returning to normal, leaving the housing market to bottom out before it begins to steadily correct itself.

Flipping was so popular in the United States that many DIY television programs like A&E's Flip This House detailed the process.

The other significant adverse financial aspect of the mentality of flipping is when interest rates increase. The resulting lack of sales, and major price depreciations (often far below) their previous increases, results in a flood of properties on the market at one time, not selling due to lack of buyers, causing a meltdown of a local market and potentially the economy as a whole.

Further information: United States housing bubble
[edit] Rejuvenation and gentrification
"Rational" flipping can encourage a rejuvenation and restoration of a previously decrepit neighborhood, but rising property values can also be seen in a negative light, termed gentrification.

Under the broken windows theory, an unkept house/area attracts a criminal element, which drives out those making a responsible living, which allows for more criminal element, and so on in a vicious downward cycle. The restoration creates jobs, particularly in construction, for locals and generates more sales (and sales taxes) to local vendors (initially those involved in selling construction materials). The newly remodelled homes will then attract new populations and businesses to a region, encouraging more economic development, plus the remodelled homes' higher assessed values brings more property tax revenues to local governments, allowing for more improvements to the area and driving out the criminal element.

As flipping occurs more frequently in a community, the total cost of living there can rise substantially, eventually forcing current residents to relocate, specifically less affluent younger and older people. On a small scale, flippers can cause distress and disturbance to their immediate neighbors by performing lengthy renovations. Flippers commonly have no interest in neighborhood integration,[citation needed] which may cause tensions with long-term residents. During the real estate bubble, flipping and gentrification both have been linked to the mass migration of people to California, where high real estate prices and ample jobs attracted wealth seekers.[citation needed] In response, many native Californians were forced to migrate to the less expensive areas of surrounding states such as Arizona, Nevada, Texas, Oregon and Washington.[citation needed] This migration of Californians caused further gentrification in the areas that they had moved to en masse. Areas such as Phoenix, Arizona and Las Vegas which were once very inexpensive to live in prior to the real estate bubble are now quite expensive, although prices have dropped significantly since 2006.

[edit] Property values
After a renovation, the house itself will be in better condition and last longer, and can be sold at a higher price, thus increasing its property tax assessed value, plus increased sales for goods and services related to property improvement and the related increase in sales taxes. Neighbors can also benefit by having nicer homes in the neighborhood, thereby increasing their own home values.

[edit] Regulations
In 2006, the Department of Housing and Urban Development created regulations regarding predatory flipping within Federal Housing Administration (FHA) single-family mortgage insurance. The time requirement for owning a property was greater than 90 days between purchase and sale dates to qualify for FHA-insured mortgage financing.[4] This requirement was greatly relaxed in January 2010, and the 90-day holding period was all but eliminated.[5]

[edit] Illegal activity
Flipping can sometimes also be a criminal scheme. Illegal property flipping is a fraud-for-profit scheme whereby recently acquired real property is resold for a considerable profit with an artificially inflated value. The real property is resold within a short time frame, often after making only cosmetic improvements to the real property. Illegal property flipping often involves collusion between a real estate appraiser, a mortgage originator and a closing agent. The cooperation of a real estate appraiser is necessary since a false and artificially inflated appraisal report is required. The buyer (ultimate borrower) may or may not be aware of the situation. This type of fraud is one of the most costly for lenders because the loss is always large.

The following is an example of an illegal property flip: A buyer contracts to purchase a property in his name for $30,000. Before closing the deal, he draws up a second contract to sell the property to a co-conspirator at $70,000 — a price substantially higher than market value. He seeks a loan for a second contract through a mortgage lender or a mortgage broker and submits an application. A real estate appraiser inflates the value of the property, enough to justify the loan, and is paid triple the usual fee (although many times inexperienced or incompetent appraisers are unwittingly caught in the scheme through pressure and intimidation from the scammers). A mortgage lender approves the application and releases the $70,000. Next, the contracts for the property are closed either simultaneously or within a short time from each other. The originator of the scheme takes the $70,000, pays off the $30,000 and divides the remaining $40,000 between himself and any other plotters — usually the mortgage broker or loan officer and sometimes the second buyer. The lender ends up with a 100% or greater loan to value mortgage. That buyer makes a few payments on the property, then defaults and allows it to go into foreclosure. Finally, the lender learns that the property doesn’t even cover the loan value.

In the United States, the Uniform Standards of Professional Appraisal Practice (USPAP), which governs real estate appraisal, and Fannie Mae, which oversees the secondary residential mortgage market, have enacted practices to detect illegal flipping schemes.

[edit] See also
Housing bubble
United States housing bubble
IPO pricing
Phillip E. Hill, Sr.
[edit] Notes
[edit] References
1.^ "Cabinet ministers have made tens of thousands 'flipping' their homes". Daily Mail. Retrieved 2009-05-08.
2.^ "How the Telegraph investigation exposed the MPs' expenses scandal day by day". London: Daily Telegraph. May 15 2009. Retrieved 2010-05-07.
3.^ Crashes: The Florida Real Estate Craze
4.^ Prohibition of Property Flipping in HUD's Single Family Mortgage Insurance Programs; Additional Exceptions to Time Restriction on Sales | Federal Register Environmental Documents | USEPA
5.^ HUD Press Release, January 15 2010.
[edit] External links
Flippingpad A Social Network for the Real Estate Flipping Community House flipping resources. Community for house flippers.
[edit] Published articles
"US News: Housing bubble correction could be severe". 2006-06-13.
"Fannie Mae Announcement 04-07 on Illegal Flipping" (pdf). 2004-11-08.
Mann, Ted (September 30, 2006). "Risky Business". Scarsdale Magazine. -- about real-estate flippers in suburban New York.
"Property flipping as neighborhood destablization versus short term real estate

More Info

The Anti-flipping rule or FR-4615

The Anti-flipping rule (FR-4615) changed the real estate wholesaling business dramatically. If you’re new to real estate wholesaling or investing, and someone has told you that property flipping is illegal, it’s probably due to confusion about this HUD rule.

The Anti-flipping rule or FR-4615 was published by HUD (Dept. of Housing and Urban Development) on May 1st, 2003 to address property “flipping” on mortgages insured by the Federal Housing Administration (FHA).

This distinction of “mortgages insured by the Federal Housing Administration” is particularly important for you if you intend to go into real estate wholesaling or active real estate rehabbing and resale.


For one thing, it does not prohibit or even regulate property flipping on mortgages NOT INSURED by the Federal Housing Administration. Those transactions are still legal as long as you stay away from loan fraud or any other practices defined as illegal by federal law and the law in your state.

FR-4615 did create new business hurdles for wholesalers and other “Quick-turn” real estate investors with some of the following:

•Confused Definition of “property flipping”
The announcement – in the Federal Register - of this rule included a new definition of property “flipping” as occurring “when a recently acquired property is resold for a considerable profit with an artificially inflated value”.

This created a stigma to the term “flipping” which prior to this had been used simply to describe the process of legally acquiring (or controlling) and reselling a property for profit within a relatively short time.

The definition given by FR-4615 is more accurately termed “mortgage fraud” (in my humble opinion), but they chose to go with “property flipping”. Imagine trying to convince a private lender to partner with you as a “real estate flipper” with this confusion.

•Sale by “Owner of Record” Only
Under the anti-flipping rule, “only the owner of record may sell a home to an individual who will obtain FHA mortgage insurance for a loan”. For a quick-turn real estate investor, this means that you cannot wholesale a property to an FHA buyer, which you have not purchased and completely recorded at the courthouse. Creative acquisition techniques such as a Real estate option, Power of Attorney (POA) or Subject-to financing don’t work under this restriction.

•No Sales Contract Assignments or Resale
Sales Contract assignments are explicitly barred for FHA Buyers. Meaning that if you signed a contract on a property and tried to assign the contract to an end buyer, that end buyer would not use FHA-insured financing (or so-called “FHA loans”) to purchase your contract.

•Time Restrictions on Re-sales (The Seasoning Issue)
FR-4615 also defined how soon after a house is flipped it would be eligible to be bought with a FHA-insured loan. Before the anti-flipping rule, you could buy a house at $100,000 dollars and re-sell it within hours or days to most buyers at $150,000 dollars as long as inspections and appraisals supported this re-sale value.

(By the way, this is still the case for non-conforming loans – loans that are not insured by HUD or restricted by HUD guidelines)

With the advent of the anti-flipping rule, re-sales occurring within 90 days or less after acquisition would not be eligible for FHA-insured mortgages, re-sales are eligible with an additional appraisal from an independent appraiser (buyer-appointed, most likely).

Additionally, FR-4615 requires the buyer’s lender to obtain additional documentation (i.e. repair documentation) to support the value for re-sales occurring between 90 days and 1 year in locations or circumstances where HUD considers flipping to be a problem.

Quick-turn Real Estate after FR-4615

The restrictions imposed on the “buy-side” by the anti-flipping rule means that you as a wholesaler would be stuck with the possibly draconian terms of whatever bridge financing you used to acquire the property.

Successful real estate wholesalers, rehabbers and other quick-turn real estate specialists have made adjustments in their business to deal with the realities of FR-4615. Some include:

•Wholesaling Deals strictly to cash buyers or privately-funded investors
•Legal “assignment loopholes” like “entity assignments” rather than contract assignments
•Identifying lenders that specialize in non-conforming loans or have no seasoning requirements.

Allow me to further comment

I never said I agree with the laws. I never said that flipping is illegal. I will say that you may be hard pressed to locate many in title offices, etc who will do closings on properties where you are flipping, because of the confusion as to the laws.

I support laws that protect people, I do not support laws that hinder people from making money if they are acting properly.

Those making the laws like to think that everyone who invests in real estate are out to take advantage of people and in most cases, we are sometimes the only one's who can actually help.

Many of these laws are slated to those who are selling to indivduals who are going to reside in the property. We don't always sell to those individuals.

just ask around

Banks are not law makers. They will not allow u to assign contracts on Reo's, but there are ways around it. Your best bet like I stated earlier is find a title agent that other wholesalers are using. If any of them are run or owned by a lawyer, ask them. They study laws and that's what they went to school for. Remember u are assigning a contract (piece of paper) to a cash buyer. Your not selling the house. Your selling the paper.

Best of luck.


You Can Have and Be Anything you Want!!
Jason Bly (The RE_Situation)

Visit Me at
Push Button Yellow Letter Software-
My how to take Discount Vacations Blog-


Have you attended any real estate clubs in your area? If not go to them and ask them about assignment of contracts. You may be surprised how many may tell you they have done the same thing. A lot of people who are not familiar with assignment of contracts may state that its illegal because they assume that you need a licence to purchase and sell a contract. I'm on the verge of doing my first assignment, I live in Louisiana and most who are not familiar with the proceedings out here tell me the same thing. The real estate investors at the meetings I attend to however told me its perfectly legal. They are even willing to do an assignment of contract with me.

So keep doing your research before you go believing someone who doesn't even have experience in the real estate market. To be honest if these people are claiming this to be illegal I would ask them for written prove because most people just say whatever.


Thanks for all of the legal information. I've been interested in paper deals for some time now. I was wondering what was wrong with all of the people that claim that assigning contracts is illegal...

Professionals WILL a lot of times claim that something is illegal when it's outside of their expertise. Even doctors do that. It's a shame when decent people are given a hard time because of an "expert"'s lack of humility.

I Must be goig to jail

Along with my title company, about 25 other investors that I personally work with and their attorneys ETC, ETC. I have done 3 assignment of CONTRACT (not buying and selling real estate or representing anyone but myself) in the last 60 days. We are in Colorado. By the way assigning a contract can be done on just about any thing! A house, a dog, a pile of dog whatever as long as it is an assignable contract. By the way the state approved contract used by realtors in the state of Colorado has a line that states whether the contract will be assignable or not. Must be illegal right?? WRONG and no I don't need your funding unless its a REO or most shorts sales. My transactional funder charges 1%, no fees. No one should every pay more than 2%, no fees!

Happy assigning every one! (there are a few states where it is not legal)
Michael Mangham
MD Home Acquisitions

P.S. Didn't the FHA do away with their 90 day seasoning back in April?


Knowledge is power, but execution trumps knowledge. Tony Robbins Seller site Buyer site Bird Dog Site Tenant/Buyer site

Assignment Contracts

Thank you all for your responses! I am in (Northeast) Ohio.

kveigel wrote:
Ok, I read the books, read the forums, and purchased the Success Academy and everything pretty much states that Assignment Contracts are legal. Well, when I spoke to my loan officer last night, he told me absolutely NOT. He said it is completely illegal and this is why banks won't fund these types of transactions. I decided to do some researching and spoke with 2 real estate attorneys, a realtor, title co., and loan originators who all told me it was not legal. How can this be? I was also told that you may find a title co. willing to work with you, but over time, you can get caught and go to jail. Yikes!! I wish I wasn't getting so many different answers. What is honestly true?



IS NOT ILLEGAL!!! You are not selling the property, you are selling the rights to purchase a property via your contract! These posts are getting ridiculous. In regards to jimmybtx's post... the reason someone would want to wholesale instead of doing a double close or buy/rehab/flip etc. is because

1. It's easy.
2. You need zero or to very little money (i.e. earnest money deposit).
3. You have ZERO risk.

Finally, just because one knuckle head tells you that it is illegal doesn't mean it is the gospel. You need to talk to other investors who are doing wholesaling every day in your city and/or state. Do you think DG would risk a huge lawsuit by conducting business and promoting a strategy that is illegal? Come on now, the guy is a little more savvy than that.

When I see posts like this, I see someone (whether consciously or subconsciouly) letting their brain create stories of why this program won't work. They're brain is looking for proof to validate its fears and doubts. There is a great book out by a guy name Michael Nitti. The book is called "The Trophy Effect." You can fiind it on amazon. The book talks about how our brain protects us from making mistakes, looking foolish, etc. by fact finding and creating stories. Our brain looks for proof that will validate our fears making us give up. If you're struggling with doubt or fear, you have to read this book. It will change your life and how you work your real estate business.

Press on...

Allow me to add this

Here is part of a letter from a closing agent to one of my clients. This is verbatim and from a prominent title company in Texas with offices nationwide, a company who has been in business 50 plus years. I was not authorized to mention the ir name, so I will cut and paste it.

"With regard to closing transactions as we have discussed Monday, through the use of your business model, which as I understand, involves another party stepping in and closing a transaction with which you entered into a legal and binding contract to purchase, and thus entering into a private arrangement with the actual end buyer with regard to compensation I have determined that we will not allow such transactions.

You are required by law to hold a legal ownership interest in the subject property in order to consumate such a transaction".

This is as I said a small portion of what was received by her.


While you are correct in what you say, the problem is in the manner with which someone is doing it.

I think the problem that all these professionals have is this. You are entering into a legal contract to buy and if you cannot complete the transaction for reasons other than it does not pass inspection, you cannot get funding, etc, than you are expected to be at the closing table, closing the deal. If you do not close, then the earnest money becomes the property of the seller and the deal is void.

I never said I agree with this. I feel that if someone decides to pass on a deal to another party for a agreed to level of compensation, there is nothing wrong with this.

Todays real estate investing and funding landscape has changed. many of the things that were permitted are no longer permitted.

You make mention of Dean and his promotion of certain techniques. I have heard that he discusses transactional funding lately.


I don't ask there permission! To my title company I provide a legally assignable contract, mine or the one that realtors are required to use (state of Colorado)and my signed assignment contract with my buyers non refundable earnest check of $5,000 dollars and arrange a closing date, Usually with in 10 days. I work with cash or hard money buyers only. It pays to have a buyers list!
I think enough has been said, if people can't do these deals (which they can and do every day) in the future that they should use a reputable Transactional funding company. 1% to 2% Max points with no fees ever!!! Double close instead of assign, big deal! If you don't want to do assignment deals than DON'T DO THEM! Leave us alone, advertise your funding somewhere else. Do we all agree on this?

Go make some offers on properties!!!
Michael Mangham
MD Home Acquisitions LLC


Knowledge is power, but execution trumps knowledge. Tony Robbins Seller site Buyer site Bird Dog Site Tenant/Buyer site


I read your last thread reply and should I assume your statement that says "advertise your funding elsewhere, leave us alone, are we all in agreement" is directed at me, correct me if I am wrong.

I talk about what I do because I am in business to help people. DG'ers are not my only source of clients. People who contact me here about transactional funding do so because I tell people the truth, I work hard for them and I am often the one real link to the funds to get a deal done.

Yes, I make money, nothing wrong with that. I make money because I get the deal done. What I have to offer is far superior to what anyone else in transactional funding offers and no one comes close.

Not one transactional funder I know of and I know them all, offers extended transactional funding upwards of 40 plus days. Most will go ten days and thats it and thats if they like the deal and feel strongly that they should go that term.

I am not going to stop talking about Transactional funding and the benefits because it makes some people here tired of reading it. My inclusion in this thread was to discuss something on a thread that I didn't start. I gave my opinion and provided some very lenghty but timely information on the subject.

You place a contract of assignment for a deal and it is never questioned works for you. What about those people who do it and get called to the mat on it? Not every assignment deal is going to go through without someone somewhere one day scrutinizing it.

I copied and pasted what I was permitted to from my client. If people here want to insist it is legal that's fine. If I was permitted to share some of the other things that were put in there, it would make some cringe.

Just to clear up something. My client didn't ask anyone's permission. She put in a offer and all the paperwork including the assignment of contract and that is when the discussions started. I got her as a client when she was referred to me to consult with her. A referral from the broker of record for the agency handling the sell side of the transaction.

transactional funding

I am very new at the investing game,I already now about the workings of an assignment but i dont know what a transactional funding is,or a double closeing either. I would like to know how it works becouse i was planing on doing an assignment for my first deal since i have no money to start with. please help....

Syndicate content