Real Estate Fraud Targeting Seniors
Those who commit fraud often target and exploit senior citizens. In a recent publication, the FBI cited the following reasons, among others, for why such targeting occurs:
· Senior citizens are most likely to have a “nest egg,” to own their own home, and/or have excellent credit, all of which make them attractive targets.
· People who grew up in the 1930s, 1940s, and 1950s were generally raised to be polite and trusting. Con artists exploit these traits, knowing that it is difficult or impossible for these individuals to say “no” or just hang up the telephone.
· Older Americans are less likely to report fraud because they don’t know who to report it to, are too ashamed of having been scammed, or don’t know they have been scammed.
Common Types of Real Estate Fraud
a. Foreclosure Rescue Schemes
For years after the beginning of the mortgage and housing meltdown in late 2007, the fraudsters keyed in on what can be described as Foreclosure Rescue Schemes, which includes fraud in the areas of loan modifications, forensic audits, mass joinder lawsuits, and short sales. It also encompasses bankruptcy fraud, and variations of the same.
This was the fraud of the moment from late 2007 through 2013. It was easy and quick money for criminals, who asked for the payment of money up front to save people’s homes. These criminals seldom did more than take the money and run and there were numerous targets. For additional information and tips to help you avoid becoming a victim, click the following link: https://oag.ca.gov/consumers/general/foreclosure_scams.
b. Timeshare Resale and Rental Schemes
This sort of fraud is perpetrated against owners of timeshares. The scammers will often-times get lists of timeshare owners and misrepresent to the owners that a buyer or renter is interested in the timeshare unit. All the owner must do is pay or wire an amount of money for handling, legal processing, or other supposed service. But the reality is that there is no real buyer or potential renter, and the money sent to the scammers is gone for good.
c. Online Rental Fraud
This is the variety of fraud where a [typically] vacant, for-sale home is fraudulently advertised online for rent at a below market price. There is almost always a reason as to why the property cannot be shown, so the potential victim is instructed to drive past the property to see if they like it and are interested. The scammer then requests a wire deposit, and once the money is sent, it is gone forever. No money should be sent in cases like this unless you have verified the person you are dealing with is authorized to rent the home. And you should never rent a home without first visiting it.
d. Real Property Recordation Fraud
Quite simply, this fraud includes schemes (i) to steal (transfer) title to real property for resale or to borrow money by the scammer or (ii) to fraudulently place liens against the property. The victims of fraud involving the recording of forged and/or fraudulent documents are often senior citizen homeowners who own their homes outright. In such cases, the criminal can create a fake promissory note that the senior owner owes the scammer money, and then forge and record a Deed of Trust securing the promissory note.
e. Reverse Mortgage Scams
Reverse mortgages can be an excellent choice for many seniors with limited cash for living expenses but with substantial equity in their homes. Reverse mortgage scams are engineered by unscrupulous professionals in a multitude of real estate, financial services, and related companies to steal the equity from the property of unsuspecting senior citizens.
In some reverse mortgage fraud schemes, the con artist will endeavor to convince seniors to take money out of a home’s equity via a reverse mortgage and then to allow the con artist (purportedly a financial advisor) to purchase an annuity for the homeowner. Ultimately, the scammer and cash disappear.
Fraud Avoidance Tips
1. Use only CalDRE licensees when engaging the services of people or companies offering rental, home loan, foreclosure rescue, or other real estate services on your behalf.
Check out the CalDRE website at www.dre.ca.gov. Make certain that your agent is licensed by the State of California and check for any disciplinary action. If you have an attorney helping you, check them out on the State Bar’s website at www.calbar.ca.gov. Again, look at their disciplinary record if one exists. Lastly, check whomever you are considering working with through the Better Business Bureau at www.bbb.org.
2. Never pay anyone for home loan or foreclosure relief services in advance of their successfully completing the work you wanted them to do for you.
3. While wiring or electronically transferring funds is a welcome convenience, we all need to exercise extreme caution. Your real estate professional, lender, and escrow officer will provide you written transfer instructions along with an advisory. Please read and follow the instructions carefully and make a phone call should you have any questions or concerns.
4. Monitor and periodically check the title to your Real Estate Holdings, just like you check your credit report. And act immediately if you detect fraud.
5. If something sounds too good to be true, it probably is!
Unfortunately, fraud by predators and scammers against seniors in real estate is common and requires that you be vigilant and skeptical. Proceed cautiously and do your homework.
If you have become a victim of real estate fraud, or suspect that you have, please contact the California Bureau of Real Estate immediately at www.dre.ca.gov or call toll free 877-373-4542.