'House flipping' said to cheat minorities

ALBANY, N.Y. -- A four-bedroom, 1-bath colonial for only a $450 monthly mortgage payment? How can you go wrong? Lots of ways. Fair housing advocates say the first-time buyer of that $85,000 Syracuse, N.Y., home lost out in one of the many forms of "house flipping," or the fast resale of property at high profits.

Now, house flippers, are being targeted by government officials.

In this case, a developer interested a client in the house, bought it himself for $44,000, and resold it hours later for $85,000, according to the Fair Housing Council of Central New York.

A subsequent appraisal arranged by the nonprofit advocacy group put the house value at $45,000. The new owner buckled under the $707 monthly payments she thought would be less than $500, and moved to public housing.

Nationally, the practice can be costly to all taxpayers because the deals often involve government-subsidized loans that end in default, according to Adam Glantz of the US Department of Housing and Urban Development.

The buyer of the Syracuse home, former foster mother Myrtis Jackson, 54, wanted to step up from her subsidized apartment that cost $110 a month. She said the foreclosure forced her to send her ill mother to a nursing home.

The developer did not return a request for comment. He faces no criminal charges.

House flipping was first noticed in Baltimore in the 1990s. It spread to New York and other cities with large minority and/or immigrant populations.

"Minorities are usually targeted, simply because they are often first-time home buyers and they don't have a mentor -- a father or brother -- to walk them through the process," Glantz said.

New rules have been imposed on banks and other HUD-backed mortgage lenders. For instance, a house cannot be bought and sold with HUD loans within 90 days. New York officials want to do more: This week, a legislative hearing will focus on house flipping and Internet real estate sales.