While many individuals out there are actively trying to assist people in foreclosure trouble, there are folks who also are out to take advantage of you. To help you understand the difference between foreclosure scams and foreclosure help, here are several of the foreclosure scams for you to be aware of.
Although relatively rare, one of the most devastating frauds for property owners is title fraud. This type of fraud starts with identity theft. The scammer will use false documents to pose as the property owner, registers forged documents transferring a property to his or her name, and then gets a new mortgage against the property. After securing a mortgage or line of credit, the criminal takes the cash and leaves the owner on the hook for future payments.
While an identity thief may get a forced discharge of an existing mortgage, it is generally held that fraudsters are more likely to go after homes that are free and clear of mortgages: these have fewer complications and they tend to be held by older people who may be less aware about how to guard against identity theft. Criminal Services Intelligence Canada notes that home owners who rent out their homes or who have no existing mortgages on high-value properties are more vulnerable to being targeted in title-fraud schemes as a large mortgage can be secured with the property.
The other key to prevent being a victim is to engage in protection of personal data (shred anything with your name or account # on it, protect you PIN codes, etc.) Taking precautions can also mitigate against more common types of identity theft –related losses (such as credit card fraud. As well as protecting their own information, investors and homeowners should ensure that trusted parties are taking proper security measures.
2. Foreclosure And Home-Equity Fraud.
Criminals and criminal enterprises can take advantage of property owners who find themselves in a cash crunch, being short on funds for liabilities such as mortgage payments or other purposes. Two common scams that exploit a victim’s need for cash are Foreclosure fraud and home-equity fraud.
The Financial Consumer Agency of Canada (FCAC) warns that Foreclosure fraud occurs when a property owner who is having difficulty making mortgage payments is approached by a criminal offering a loan to cover expenses and consolidate loans, in exchange for upfront fees and an agreement to transfer the property title. However, in contrast to real debt consolidation programs, the FCAC says, the criminal will keep all the payments made by the owner and ignore bills and taxes. The criminal then re-mortgages the property and absconds with the money, leaving the former property owner without the home but still in debt.
3. On-line Rental/Sale Scams.
In these scams, rental property is advertised (usually at low costs) on on-line classified sites like Craigslist or Kijiji. The ads use information and photos describing the property that has been “scraped” from legitimate ads, such as those on the MLS. A scammer will impersonate the landlord, property manager or estate agent and will respond to emails and calls from prospective tenants. The scammer indicates he or she is unable to meet a prospective renter at the property, and instead proposes a meeting off site to exchange keys, sign a tenancy agreement and collect rental deposits. Victims may only learn they’ve been duped when they show up at a property to discover that it is already occupied.
4. Property Investment Seminars And Courses.
Educating yourself about property investment can be essential for success, but prospective investors should be alert and do their research on seminar providers. There are legitimate speakers and seminars that provide beneficial information, others exist primarily to take money from the credulous … and there are some that are in between.
Prospective investors should be cautious when it comes to seminars or courses that offer investor education. The value of the information provided can vary wildly, as can the costs. Some may be free, with sponsorship by a company or association, others will charge money, ranging from nominal amounts to upwards of tens of thousands of dollars. Still, even if someone pays for a course that provides basic information that could be found through a simple Internet search, it does not mean that the seminar was a scam. A rip-off may charge excessive prices but be completely illegal, but a scam typically involves legal wrongdoing, misrepresentation or fraud.
One common type of seminar is designed to hook buyers into “sure-fire” investments that are promoted by the seminar hosts. Potential investors may be invited to these seminars through an ad in a newspaper or magazine, a phone call, an email or other method. These seminars may include a motivational speaker, an “investment expert” or a “self-made millionaire.”
Some seminars may make money by charging attendance fees, selling highly priced reports or books and selling property and investments through high-pressure sales tactics. Real estate investment companies holding the seminars may suggest attendees follow high-risk investment strategies, such as borrowing huge sums of money, to buy into an investment offered by the seminar hosts.
Some companies have been known to fly prospective investors to view real estate developments. This could be a tactic to pressure commitment to a deal without time to obtain independent information or advice. Investors sometimes end up having to pay for their travel and accommodation if no investment is made.
The relatively booming market in Alberta has been a hotspot for these scams, and the Alberta Security Commission has issued a list of “red flags” to look out for when approaching a property investment seminar. The basic advice, be sceptical of claims and complete your due diligence before committing any money to an expensive course or investment.
5.Home Improvement scams.
The Canadian Council of Better Business Bureaus listed “rogue door-to-door contractors” as among their top 10 scams of 2013.
These operators may come with unsolicited offers and deals that are too good to be true. Typical approaches include: offers to seal or repave a driveway, or a roofer who can work cheaply using leftover material from a previous job. BBB warns that fraudulent “contractors” will use high pressure sales tactics and offers of a one-time deal to entice consumers.
The BBB advises that property owners take the time to do due diligence. Property owners should get the company, name, address and ensure that all verbal promises are backed by a written contract. A scammer may ask for payment in cash or via a cheque and offer to come back at another time to finish the job. After cash changes hands, the BBB says, “you will probably never see them or your money again.”
Generally, for the hiring of any contractor, it is advisable for a property owner to check references and ensure that the company or person has a reputation for fair dealing and quality work. This can be good sense when dealing with legitimate contractors, ensuring that you are likely to receive such as on-time and on-budget estimates.