Real estate fraud is real
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 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
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
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
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.
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.
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
✔ You are given a sales pitch with logical holes
or asked to meet away from an actual business
✔ You are dealing with an unlicensed agent or are asked to pay
✔ You are asked to pay for
something outside of escrow or
Here are some tips to avoid
✔ 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.
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?
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.
service, and get
the name and
contact info of
Write a formal
letter to the
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
© 2012 FIGH T BACK! INC. ALL RIGH TS RESERVED.
David Horowitz is a leading consumer advocate. Visit his blog at
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stations. Consult your local listings for dates and times.
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(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
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