During the housing bubble scams commonly manifested among fraudulent brokers issuing predatory loans or, as home flipping reached a feverish pitch, real estate gurus charging tens of thousands for get-rich-quick courses. When the bubble burst, many of those same swindlers set their sights on cash-strapped folks facing foreclosure.
But as housing recovers and technology evolves, real estate scams have not subsided. Rather, despite government initiatives on both the federal and state level, they’ve blossomed into more elaborate and sophisticated ploys.
The scam: Most renters search for homes and apartments online. Scammers take advantage of internet listing data of actual homes for rent or sale and repost them as their own on popular sites like Craigslist. The scammer may ask for a security deposit or broker fee upfront. The most common scam is to ask for a fee for a phony credit check. This scammer will collect this fee from sometimes hundreds of people and then simply disappear. If prospective renters do hear anything at all back from the “agent” again, it will be to issue a denial of their “application”.
How to spot it: Be wary if you’re asked to wire any money upfront, especially if you’ve never met or signed a contract. Some scammers have actually gained access to homes, advertising and showing them at alluringly low prices, so don’t let your guard down just because the “agent” has walked you around a home. Finally (do we really have to say this?), if the person responding to your inquiry is out of the country, but asks you to wire any fees to someone, don’t walk, run!
Read more about rental scams on the FTC’s website.
Loan Modification Scams
The scam: Millions of homeowners have faced foreclosure in the last five years and millions more are still underwater on their mortgages. The sheer desperation of these borrowers have led them to be prey for those running loan modification scams. A number of scams fall into this category: fake foreclosure counseling, forensic loan auditing, non-existent class action lawsuits, leaseback programs and fraudulent “government” modification programs. Most of these scams begin with a simple phone call to a distressed homeowner, promising a lifeline in the form of a foreclosure related service. In almost all cases you will be asked for fees to get the process started. In the fake leaseback deal, you surrender the title or deed to your home.
How to spot it: Again, be wary of telephone callers asking for fees upfront. Scammers have gotten better over the years and know that it may take 3-4 telephone meetings before you feel comfortable paying a fee. Foreclosure counseling is provided for free from agencies approved by Housing and Urban Development, a government agency. Before accepting any loan modification, contact a reputable lender to investigate your options and compare the offers. Most large lenders, like AmeriSave, are approved to offer government housing programs like the Home Affordable Refinance Program (HARP). AmeriSave, having been in business for over 10 years and continued to operate while the housing bubble burst, is a direct lender that has refinanced hundreds of thousands of homes.
Check current mortgage rates here.
Read more at Loan Modification Scam Alert.
The scam: Get-rich-quick schemes have been around since houses were built out of mud and stone. With historically low mortgage rates more people have renewed their interest in investing in real estate. Many self-proclaimed real estate investing experts hold educational seminars promising to divulge the secret of making millions through real estate investing with a course that costs little to no money. You leave the course, having spent more cash on an advanced course that offered nothing but mystery and vague tips. Your options for recourse are few, as when you enrolled in the course, you signed a release that prevents you from taking legal action.
How to spot it: Not every workshop or real estate expert is a con-artist. Avoid being scammed by doing your homework. Ask your investment advisor, read up online and check out the company’s Better Business Bureau rating.