Fraud in Real Estate
Many people contribute fraud in real estate as the demise of the mortgage industry. There is little doubt that scam artists have siphoned billions of dollars from unsuspecting people through home equity thefts, foreclosure bailout scams, straw buyer scams, and rental fraud.
Anytime fraud in real estate occurs victims must become proactive in reporting the incident to local law enforcement. Police reports are needed to begin the process of collecting evidence to prove a crime was committed.
Law enforcement officers will need to obtain the names and contact information for all parties involved, along with any documents such as trust deeds, quitclaim deeds, purchase or rental agreements, and escrow statements. They will also require any receipts or cancelled checks that were given or received.
One of the most prevalent sources of real estate fraud is foreclosure bailout scams. People who are faced with the possibility of losing their home often become desperate and vulnerable. Many will do whatever it takes to avoid foreclosure and often become victims of bailout scams.
The way that scammers weasel their way in is by telling homeowners they can help them arrange a short sale which allows them to sell their home for less than they owe on their mortgage note.
The so-called 'foreclosure specialists' convince unsuspecting homeowners to deed their house to them for a fee. This amount is usually between $1000 and $2500. Next, the scammers tell homeowners they can continue living in the house by paying rent or they offer to rent the home to other tenants.
The con artists then collect monthly rent, but never arrange the short sale because they have no legal right to do so. In the end, the house falls into foreclosure and tenants are evicted. The scammers walk away with the fee they collected for a non-existing deed transfer, along with all rental income collected.
Home equity theft often affects elderly people who have built up home equity and looking to make home improvements. Unscrupulous contractors frequently prey on senior citizens by charging them more for home improvements or stating they require work that isn't necessary.
Another tactic used in this form of real estate fraud is salesmen will offer homeowners the option to refinance their home with exceptionally low interest rates and give them cash to pay off credit cards or other outstanding debts.
Illegal home equity loan contracts are drawn up by con artists that include terms which are entirely different than what homeowners were told. Homeowners who refinance through scammers later realize they were duped and end up with high interest mortgages that include balloon payments which become payable in a few years. In order to keep their property they have to take out another loan.
Straw buyer scams have had a serious financial impact on the mortgage industry. This scam often occurs when people attempt to use creative financing strategies to buy or sell a house.
The way this fraudulent scam works is straw buyers are asked to sign loan papers using their good credit. The scammers then cash out home equity and pocket the proceeds. Loan payments are never made to the lender and the straw buyer ends up holding the bag. Not only are they responsible for paying off the loan they might also face criminal charges at state and federal levels.
Lastly, rental fraud has become prevalent due to the vast amount of foreclosure properties. Anyone renting a home must conduct due diligence to ensure they are renting from the owner and that the property is not in foreclosure.
Fraud in real estate rentals occurs when scammers rent a home they do not own. This type of con artist scours neighborhoods for abandoned homes. They then enter the property, change the locks, and advertise the property for a substantially reduced rate.
Tenants provide scammers with a security deposit, along with one to two months rent monies. Scammers continue collecting rent money until the home is foreclosed or the real homeowner discovers what is going on and files charges. Sadly, tenants end up getting evicted and lose every dime.
Due to the fact there is money to be made in real estate there is strong probability that real estate fraud will continue. The best way to avoid becoming a victim is to buy, sell, and rent houses from credible real estate agents, property management groups, private investors, and homeowners.
Always take time to perform due diligence and read the fine print of loan or rental contracts. If you suspect fraud in real estate is taking place, immediately contact local authorities and file a police report.
Published on November 14, 2012 at 04:37 PM