Today’s bad economy and worse housing market are combining to create a field day for scam artists, who find easy pickings among homeowners desperate to avoid foreclosure or just save a few bucks.”Any time that the economy is bad, scammers come out of the woodwork,” says Katherine Hutt of the Better Business Bureau, which logs some 1.2 million complaints a year about scams and bad company practices in general.
Scam artists seem to especially target senior citizens.
“Many of the elderly were raised in a different time, when people were more honest than they are today,” says Polyana da Costa of consumer-financial Web site Bankrate.com. “You also didn’t have the Internet, which is where many of these scams originate. You go online looking for a better mortgage rate or some sort of foreclosure rescue and you end up in the wrong hands.”
Here’s a look at common housing-related scams that da Costa and other experts warn consumers should avoid:
This scam targets people facing foreclosure, with fraudsters promising to negotiate a loan modification for them in exchange for big upfront fees.
Lenders do approve such modifications these days, but the U.S. Department of Housing and Urban Development prohibits legitimate foreclosure-prevention counselors from charging advance fees to help you negotiate one.
“If I can get one message across to borrowers, it’s: ‘Do not pay any upfront fees,'” da Costa says. “I’ve heard of so many people who’ve paid $5,000 to get a loan modification but who basically got nothing — and didn’t find out until months later when they lost their homes.”
Don’t be fooled by loan modification specialists who advertise their services, have big offices or operate Web sites with official-sounding names based on real government foreclosure-prevention programs.
“Scammers don’t look like scammers, they look professional,” da Costa says. “That’s how they fool you.”
Also called “bait and switch,” this scam also targets homeowners desperate to avoid foreclosure.
The scammer poses as a mortgage lender or broker who’s agreed to refinance or modify your loan on generous terms, bringing a huge stack of paperwork for you to sign.
What you don’t realise is that the person has slipped in a page that signs over your property to them for nothing.
The scam artist throws out everything except this one page, which they file with your local land-records office. Then they sell your home out from under you, often to a fellow crook who’s conned a bank into providing a mortgage.
“You think: ‘Who would ever sign a deed over to anyone else?’ — but it happens,” da Costa says. “A lot of people are so focused on looking at the numbers on a loan modification — the new interest rate and the new monthly payment — that they don’t read the fine print.”
The “Your mortgage has been sold” scam
Another simple but effective con game, this scam starts with you getting an official-looking letter that appears to come from your mortgage lender.
The letter informs you that your mortgage has been sold to a new lender and gives you a company name and address to start sending monthly payments to.
Real lenders send such letters all of the time — but so do crooks. Follow a fake letter’s instructions and you’ll end up sending your mortgage payments to a scam artist for months.
You’ll only realise your error when your real bank writes to complain that you’ve missed several mortgage payments and warns that it’s beginning foreclosure proceedings.
“It’s a nightmare,” da Costa says.
The expert advises anyone who gets such a letter to immediately call their mortgage lender or servicer to make sure the notice is real.
Don’t use any phone numbers on the notice itself — you’ll just end up talking to the scam artists. Instead, dig out a previous mortgage bill and call the number listed there.
You answer a knock on your door one day and find a workman wearing coveralls and a sheepish look on his face.
“Hello, there,” the man says politely. “We were in the neighbourhood fixing a roof and we noticed that your roofline looks crooked. We have some leftover materials from the other job and can fix it right now if you’d like for a really good price.”
You cut a deal for the work, hand over the payment — often in cash — and the workman and his crew set up. But in reality, they usually dawdle around for an hour or so, then take off with your money.
The Better Business Bureau says scammers most commonly pose as roof-repair or driveway-sealing workers — and find easy marks in today’s bad economy.
“Homeowners who in better times would have been proactively doing repairs let things slide,” the BBB’s Hutt says. “So if someone comes to door, the consumer — particularly an elderly person — can be taken advantage of because they know the roof hasn’t been checked in a while.”
Check your mail and you might find an official-looking letter suggesting that you pay $60 to $100 or so for a “certified” copy of your home’s deed.
These solicitations, which seem like they come from a government agency, typically include detailed information from records on file about your property — such as the date your local land-records office officially recorded your home purchase.
But read the fine print and you’ll see that the letters come from private companies, not the government.
Certified-deed firms charge big bucks to contact your local land-records office and order a certified copy of a deed you could easily get yourself for a few dollars.
“I tell people: ‘If you really want a certified copy of your deed, contact us directly and for $2 we’ll send you one,'” says William O’Donnell, a suburban Boston register of deeds who’s been warning consumers about these solicitations for years.
O’Donnell says certified-deed offers are technically legal, “but you really have to question the ethics of them. They imply that your kids aren’t going to be able to enroll in high school or things of that sort without a certified copy of your deed — but that’s not true.”
In fact, homeowners rarely if ever need certified copies of deeds, he says.
“Is it a nice thing to have? Yes,” O’Donnell says. “But people shouldn’t worry if they don’t have one.”
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