Everything that is old is new again, say those who track scams in the real estate market. I have been talking to a few today for a story running soon on the new scams for a down market. What I am hearing is that the kind of scams that have been making headlines recently - stealing the home equity of people having trouble with their mortgages - are crimes from years ago.
Now, after three years of falling home values there is no equity left in many homes. So scammers have turned to a couple of old schemes popular in the 1990s and revived them for a new generation of conning.
The rent skimmers: These are con artists who approach struggling borrowers and ask them to deed the house to them. They promise to let the borrowers stay and rent from them. Scammers do collect the rent, but they never pay the mortgage. When the lender forecloses after a few months they have already collected an easy $5,000 to $8,000 in rent.
A variation on this theme: just before the bank forecloses the scam artists advise their renters to file for bankruptcy. That stops the foreclosure process for awhile and bags a few more months of rent payments. Be wary, the experts say, of anyone advising you to file for bankruptcy.
Foreclosure consultants are knocking on doors telling struggling borrowers they can save the place for them - but they need money up front. That is the first red flag. Just say no. If they ask you for the deed to the property that is even worse. There is no telling all the shenanigans that can happen under the guise of smooth talkers who say they are here to help.
Here is a short video from federally-backed mortgage giant Freddie Mac on how to avoid being scammed by these people.
E-mail me or drop a comment here if there are others you think I should know about. I aim to write the story Thursday for the Friday newspaper. Thanks.
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