Experts warn that real estate scams are on the rise. These include fake property postings, deceptive mortgage relief schemes, and false promises of big paydays. What all these scams have in common is that the victims can lose a large sum of money because of the size of the transactions involved.
Because of the prevalence of mortgage- and actual estate-related fraud scams,
David Bediz, owner of Bediz Group LLC and relator at Keller Williams Capital Properties, told FOX Business that it’s vital for buyers and sellers to be careful with each step of a mortgage transaction.
Since the start of the year, the Federal Trade Commission (FTC) has sent refunds to victims of these types of scams. More than $20 million in refunds have been issued to consumers in March and July who were scammed by fake real estate investment training programs. Two separate schemes made empty promises about earning significant profits from “flipping houses” to their victims.
Another scam was a deceptive mortgage relief operation known as Lanier Law. According to the FTC, Lanier Law collected upfront fees from homeowners and falsely promised to lower their monthly mortgage payments. In August, the FTC issued $222,000 in refunds related to the scam.
According to Bediz, another circulating scam targets buyers by sending fraudulent wiring information to them.
“Scammers know when buyers are about to transfer large amounts of money to either pay a deposit on a pending contract or fund settlement with their down payment,” Bediz says.
Wire transfer fraud occurs when scammers hack into real estate buyers, sellers, or agents’ email accounts. They then use the compromised email address and login information to perform their scam. The scammers send fake wiring instructions that appear to be from a title company to their intended victims.
“Buyers can send hundreds of thousands of dollars to the wrong account – and there is no way to get it back,” Bediz explains.
Bediz warns that you should never take wiring instructions from an email or phone call made to you. Homeowners should always call the title company directly.
According to Phil Crescenzo Jr., vice president of the southeast division at Nation One Mortgage Corp, another fraud scam is a foreclosure “bail out.” In exchange for the promise of “catching up” a mortgage loan, a homeowner signs away the rights to their home.
“This is usually for a small payout, taking the equity from the homeowner and profiting from a hardship or tough financial situation,” Crescenzo says.
According to Bediz, scams also originate on Craiglist and target renters. Renters need to be wary of advertisements for real estate at too-good-to-be-true rents. Scammers use a fake email address attached to a fake ad for actual property that they do not own.
“Just because you recognize a well-known name in the industry on an ad does not mean that is who you are talking to,” Bediz warns.
Though several tenants contacted Bediz before these ads scammed them, he says, “Many others are probably sending in a rent deposit to an overseas account and will never see that money again.”
Another scam to be wary of is distressed property “angels,” Bediz advises.
According to Bediz, if a homeowner is behind on their mortgage payment, they should only deal with their bank or a trusted debt counselor.
“Some debt counselors will reach out directly to you with a scheme to get you a forbearance, and to even make payments on your behalf to get you current; but meanwhile they instead let the loan lapse and have your signature on a document that can transfer ownership to them instead,” Bediz explains.
Caution is the way to go when dealing with real estate transactions.
