Con artists who perpetrate mortgage fraud against Seniors aim to steal people’s home equity or even snatch a house away. Frequently it’s done by convincing victims to sign over ownership via phony home loans.
Paper terrorism is one way Bill Denny describes mortgage fraud. Denny, Senior Deputy District Attorney for Alameda County, California, specializes in prosecuting perpetrators of mortgage fraud. “I’ve debriefed major mortgage fraud cons and it’s like debriefing an expert burglar,” he says. Seniors are particularly vulnerable to such scams because many are equity rich and cash poor and they still like to do business on a handshake.
Some con artists are brazen and forge signatures and march into the recorder’s office and transfer properties into their own names. Before they’re caught, they’ve often taken loans out against a property and stripped it of equity.
Cons also work at building trust and ingratiating themselves to perpetrate their scams. You can protect yourself by being aware of some of the scams.
Cash offers--Cons might say, “Let me save you the hassle of putting your home on the market and having strangers traipsing through your home. I'll give you this amount in cash and you can move next week." Bad guys don’t offer the current value, so stay up on home values in your neighborhood.
Junk fees--One scam involves charging excessive fees for duplication, document preparation, and so forth. Denny says one red flag that you’re possibly being gouged is if your closing costs exceed five percent of the total amount of the loan.
Falsifying income--Unscrupulous loan brokers falsify Seniors’ income so they qualify for large loans. Brokers benefit by receiving fat commission checks. Bilked Seniors are stuck with a mortgage payment they often can’t meet. Denny tells of an 85-year-old woman whose mortgage broker indicated that she was an interior decorator with an $8,500 monthly income. It turns out that the woman was blind--clearly incapable of decorating homes. “These scams are rampant,” comments Denny.
Work only with licensed brokers. “Just as you don’t let unlicensed contractors do home improvements, you also don’t want unlicensed loan brokers doing paper terrorism on your property.” Check licenses with state, county, or city regulatory agencies.
Telephone solicitations--Cons work the phones and target zip codes where there’s a concentration of empty-nesters, who have paid off home loans or are close to owning their homes free and clear. Hang up if cons try to convince you that your home is a cash cow and want to help you squeeze money out of it.
Blank documents--When you sign a blank or partially blank
page, con artists can later insert information above your signature that transfers
a property or loan proceeds to them. Don’t sign blank documents or documents
containing blank spaces.
Foreclosure threats--If you get behind in mortgage payments,
a notice of default--the first step in a foreclosure proceeding--is published
in many jurisdictions. Scam artists then swoop in and scare people, telling
them their houses will be taken away. They then offer assistance and claim they
can save the property.
Some bilk victims by charging money to do virtually nothing. Others get victims to sign their house over to them and suggest the victim rent the house from the “rescuer” while the victim rebuilds his or her credit. Rescuers claim victims can later buy the house back when they’re back on their feet.
When a home isn’t paid off or if you’re in default, keep an eye out for people offering a seemingly good price for the property, someone claiming your equity is less than what you actually have, or promising to make your loan current to save your credit.
“The biggest trend is elder homeowners who believe they’re doing a new loan when they’re actually transferring ownership,” comments Denny. Watch out for religious organizations too. Some people claim to be ministers and prey on the elderly, purporting to have their best interests at heart.
Source: U. S. Department of Justice, Federal Bureau of Investigation
For the National Consumer Law Center’s 68 page report, Dreams Foreclosed: The Rampant Theft of Americans’ Homes through Equity Stripping Foreclosure Rescue Scams. visit www.consumerlaw.org/news/ForeclosureReportFinal.pdf
Report Fraud:
If you think you’re a victim of mortgage fraud, contact your state Attorney
General’s office. You can also contact your state’s real estate
licensing board or appraisal licensing board. At the federal level, you can
contact the National FBI Financial Institution Fraud Unit (http://www.fbi.gov/)
at 202/324-3000.