Costco Connection - March 2012

; CONSUMERconnection Real estate fraud is real

Ask David

Horowitz

IN GOOD TIMES and bad, real estate remains an ideal place for scammers to lurk. Money-hungry fraudsters often take advantage of a homeowner’s urgent need to sell, and also look to pounce on those eager to make a purchase. If you are planning to get involved in a real estate deal, be on the lookout for these common scams.

Foreclosure fraud

Foreclosure schemes prey on people who are in economic distress and in danger of losing their homes. Here are a few schemes.

Unscrupulous advertisers. Fraudsters target homeowners in danger of foreclosure via email, unsolicited phone calls, fliers or even door-to-door solicitation. Many of these “companies” are not legit, may charge excessive fees or will never deliver on services promised.

Fake services. A “mortgage consultant,” “ foreclosure service” or similar will promise to help you get out of foreclosure, for a fee, but once they take your money you will never hear from them again.

Transferred funds. Fraudsters will instruct you to make your mortgage payments directly to them or to their “company.” They may even tell you to transfer your property deed to them. However, once you begin making payments, they will get your money and keep it, and your mortgage will remain unpaid.

Contrary to advice given by many scammers, homeowners in trouble should stay in touch with their mortgage company, contacting the company or a lawyer first when in trouble.

Home buyers are at risk, too

While the above scams are perpetrated on homeowners in despair, those who are looking to buy a home with today’s record low interest rates can also find themselves in trouble. Although the following scams appear to primarily affect mortgage lenders, they can also put home purchasers at a disadvantage.

Property flipping

Property flipping is a major scam taking place in distressed housing markets across the country. Particularly in places such as Florida and Las Vegas, unscrupulous property flippers buy houses or condos and then drive up the price in a few days or weeks by selling it to someone they know. Buyers then use the inflated price to acquire bank loans for more than the property is worth, gaining excess funds for the flippers to split as profits.

Credit enhancement

So-called credit enhancement companies

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“rent” investors phony bank account balances so they can show lenders they have the finances to qualify for a mortgage. The bank accounts actually belong to other people who are unaware of the scam being perpetrated.

Appraisal fraud

A dishonest appraiser inflates the value of the property. At the closing, the seller gets the check for a bogus amount based on the false appraisal, then pays off the appraiser and anyone else involved in the scam. Usually, the borrower doesn’t make any payments and the house goes to foreclosure.

As you can see, there are many forms of real estate fraud. Here are some warning signs to look out for:

✔ You are given a sales pitch with logical holes or asked to meet away from an actual business office.

✔ You are dealing with an unlicensed agent or are asked to pay upfront fees.

✔ You are asked to pay for something outside of escrow or after closing.

Here are some tips to avoid being conned:

✔ Whenever you work with someone on a real estate matter, call the department of real estate in your city or state and check the person’s license status.

✔ Never pay cash for anything, ever. Only use credit cards or checks, as they are more secure.

✔ Do your research on what a legitimate transaction should look like.

Check with friends, industry websites, the Federal Trade Commission (www. ftc.gov) and the Mortgage Fraud Task Force (www. mortgagefraudtaskforce. com). C

I RECENTLY purchased
a BlackBerry cell phone
[not from Costco] because
I was offered a $250 rebate.
However, the salesperson
neglected to inform me of all
the extra charges that would
be showing up on my ;rst
bill. At the time of purchase
I signed a two-year contract,
and now I am stuck with
a bill I cannot afford.
What can I do?

Sharon Denver, CO

IT IS UP TO the purchaser
to be aware of what charges
are involved when he or she
signs up for a new service.
You need to ask to see the
;ne print before you put your
name on a contract. Because
you did not, you only saw
these charges when they
were posted on
the ;rst bill.
Call customer
service, and get
the name and
contact info of
a supervisor.
Write a formal
letter to the
supervisor,
requesting the
termination of
your contract due
to the fact that you
cannot afford this with
the extra charges. See
if they can cancel the
charges, apply the
rebate and, if this now
makes ;nancial sense for
you, recommence the
two-year contract. C

AMY CANTRELL

David Horowitz is a leading consumer advocate. Visit his blog at www.fightback.com. He is a frequent guest on radio and television stations. Consult your local listings for dates and times.

Just log on to www.fightback.com and “Ask David.” For a fee, he will personally respond to your problem if you follow the instructions printed on his website. (Costco members receive a rebate off the normal fee.) Questions and answers of the greatest interest to Costco members will be used in this column (with the permission of the contributor) and will be posted on www.fightback.com.