Foreclosures: Watch Out for Scams
Times like these offer — in almost equal parts — fear and opportunity. Unfortunately, scammers are more than willing to take advantage of people who feel fear right now, as well as those who are looking for opportunity. Foreclosure scams are in abundance right now, causing problems for homeowners worried about foreclosure, as well as investors hoping to profit from the many real estate opportunities available right now.
Homeowner scams
Foreclosure scams that focus on homeowners have been on the rise for a little over a year now. In these scams, a homeowner worried about foreclosure signs up with a “service” that claims to help them avoid foreclosure or get accepted into a government program. Either the homeowner pays an upfront fee and the scammer scarpers, or — even worse — the homeowner signs paperwork that actually transfers ownership of the house. In either case, the results can be devastating. It is very important that you make sure that you are dealing only with reputable companies and approved representatives when seeking foreclosure relief.
Investor foreclosure scams
The other type of scam centers around would-be investors. And it also hurts tenants. Scammers get public information on foreclosures, and then offer special deals to renters. Real Estate Update offers this explanation of the scam:
They get hold of notices of default - or other publicly available reports of pending foreclosure actions — and then rent out the empty houses to tenants at bargain all-cash rents.
When investors or REO management agents later visit the property and find it occupied, the scammed “tenants” may feel threatened and respond with hostility to efforts to enter the house, according to Dagnesses.
This means that the investment in a foreclosure can mean unexpected expenses in trying to fix damage done by (usually innocent) tenants. Another problem is that some scammers are now offering to sell foreclosed homes as investment properties, taking “down payments” from several different interested parties and then disappearing with the money.
It is important to be careful right now. There are plenty of opportunities, true, but there are also serious and real dangers.
