Fraud and investment scams coexists in real estate market from the core level to the top. After investing a huge amount in real estate business, you might found that your contractor is charging thousands of dollars without finishing the work, or providing false, over-estimated cost chart. To protect yourself from this kind of situation, you need to take serious measures. You might need to put some common sense, hard-work and knowledge to be prepared from this situation.
Here goes the basics on real estate scams and their remedies:
1. Title fraud - Property owners might have to be highly alert regarding the most devastating frauds for proper, “TITLE FRAUD”. Initially, the scammers use the trick identity theft to proceed. They use fake papers to pose like the original owner. They also make the registration of the property by false names and the property will be already transferred to their names. These scammers then apply for a new home loan. After getting a mortgage or HELOC, the imposters will grab the money and disappears. The actual owner will suffer the consequences and forced to payback the loan to avoid legal action against him.
Fraud people most of the time targets those houses which has cleared the mortgage. These homes are easy to get as the homeowners are mostly aged person, and less aware of the legal facts. Most of the homeowners who have paid their mortgage or rented out for extra earnings are vulnerable to being conned.
Sometimes, fake people occupy theses properties and sell them to another party. This is definitely a rare incident, as intelligent home buyers are most likely inspects the respective property before buying.
The solution - “Title insurance” is the best option to protect homeowners against any kind of fraud. Title insurance can protect a homeowner from any unpaid liens which is due on the title, such as previous utility bills, mortgage installments, due property taxes and also from minor encroachment problems such as shifting a structure from neighbors property etc. It is also helpful in case of errors in public records and surveys.
2. Fraud regarding foreclosure and home-equity – Homeowners who is in urgent need of liquid cash, can be conned by the criminals or criminal companies. The cash may be required for liabilities such as credit card payments, student loans or mortgage payment purposes. By manipulating the homeowners need of cash, fake companies often lure them into two of the most active scams in these days....foreclosure fraud and home-equity fraud.
Foreclosure fraud normally occurred if there is situation where the criminals approaches a property owner who has some urgent need of cash money. The criminal will offer a loan for paying the due expenses and consolidate existing loans. In return they will ask the homeowner about handing over the title to them and pay a certain amount as upfront fees. They would force the owner to sign an agreement. However, in reality the imposters will grab all the payments and will not pay any taxes or bills. The criminals will put the property (home) towards remortgage and will be vanished without a trace along with the entire new loan amount. As a homeowner, you will be losing your home, but still remain in debt burdens.
The solution - Property owners or investors who are in desperate need of cash, can be easily manipulated by the imposters. As a homeowner you will be vulnerable to any scams and it can consume your existing home equity without giving you any monetary help. So, whenever you go for a loan or encashment of your home equity, always trust a legitimate bank or a lender. A genuine bank or a renowned lender or a professional broker can inform you about all risk factors involved in leveraging properties. These people must let you know everything clearly from head to toe. Avoid such people or lender who will ask you to embellish your application by exaggerating your earnings, property value or the down payment for securing a big loan amount.
3. Online scams - In these cases, rental property is advertised (usually at very low costs) on popular online newspapers or classifieds. The ads use false information and photos describing the property is vacant. The scammer will introduce himself as the landlord, property manager or estate agent. He will communicate with the prospective buyers through emails and calls. The scammer will try to avoid to meet the buyer at property and forcefully proposes to meet off site to collect the money, sign the agreement and handing over the keys. You will realise that you have been cheated when you’ve find out that the property is already pre-occupied.
The solution - This type of data or image scraping is totally opposed by the provincial and regional association of realtors. They have warned their associates to be alert from this kind of frauds. But it is also notable that property owners are not capable to prevent this fraud by their own. Property owners can use search engines listings to authenticate the address of the property. By this way tenants can directly visit the place before renting, without misleading by the frauds. Property owners must watermark their picture which they will be using in ads.
To be continued...