An old foreclosure scam from the Great Recession has resurfaced, causing fears that the economy is headed for a worsening recession. Various names are given to the scam, but it has one extreme result – victims sign over their home’s title to a criminal.
A decade ago, millions of Americans faced foreclosure and were desperately trying to keep their homes, which resulted in scammers contacting homeowners to offer them a way to avoid losing their property.
The caller isn’t an expert on foreclosures. They have simply exploited the local government’s foreclosure database.
Schemes vary from one to another. In these scenarios, the homeowner may not realize until it is too late that they no longer have any equity in their home. The new owner holds the deed, and the scammer has disappeared with all the payments.
The schemes are designed to take advantage of the fact that most people don’t read the fine print, or even know what the documents they sign actually mean. Legal documents can be confusing and difficult to understand. The language is legalistic and hard to decipher, and the documents are often written in a way that avoids using the word “foreclosure”.
The foreclosure scam could include identity theft
The scammer could then accept a fake mortgage offer in the homeowner’s name, get a mortgage, and then sell the home at a profit, pocketing the difference. The scam evolved to make it easier to transfer property after foreclosure. In this version of the foreclosure scam, the criminal either used a straw buyer to purchase the home, or obtained enough information about the owner to use the owner’s identity in the transaction.
The FBI described it as a complicated crime that had several twists and variations. In most cases, though, it had a central theme.
- Con artists pick a house they want to steal;
- They steal that homeowner’s identity. They get their hands on their personal information and use it to make fake social security cards, driver’s licenses, or other forms of identification;
- Con artists go to an office supply store and purchase forms to transfer property;
- The homeowner’s signature is forged on those documents and filed with the county recorder of deeds office;
- After the paperwork is completed, the ownership of the house will be transferred to the con artists. They will then have full control over the property.
Keep your eyes open as a homeowner
This is not to say that anyone who contacts you soliciting your business is necessarily a foreclosure scam artist but it is a good idea to be aware of how they are approaching you. Scammers frequently claim to be from the government or from some entity that is affiliated with the government.
They may give you a number to call and ask for verification. The number they give you to call will either be the number for the scammer or a number that will lead you to the scammer.
Don’t trust anyone who says they can stop a foreclosure. That’s not true. Only the lender can stop a foreclosure. Be wary of “foreclosure specialists” who say they can get you a loan modification or make a lender accept a short sale.
No matter what the scammer tells you, never sign over the deed to your home to a stranger. Above all, to avoid a foreclosure scam, don’t sign anything.