Beware the Real Estate Scam Artists....Real Life Real Estate Scams Part 1

I have been doing a lot of research lately on Real Estate scams that have been going on now for years. I am amazed that with the power of the internet, news bulletins and general information that thousands of homeowners keep falling for these scams. I felt really bad reading the endless amounts of horror stories about people losing their homes to con artists. These people were grasping at straws to try and save their homes and ended up losing them because of these con artists.

So, after doing hours of reading and research, reading horror story after horror story, I decided to try and get the word out to everyone including our number one concern as real estate agents: you the consumer; our clients.

Real Estate Scam #1: Signing Your Home Away

The most common form of scam right now is targeting the homeowners who are behind on their mortgage payments and have had a Notice of Default filed against them. Typically the scam starts like this:

You are behind on your payments, possibly facing foreclosure within the next few months when someone knocks on your door. You answer to find someone explaining that they are a real estate investor, real estate agent, foreclosure guru, etc. They seem to be very sincere about wanting to help and would like to come in and talk to you about your situation.

Once they come in and sit down with you, they will start talking to you very sympathetically about your situation, and eventually will offer to help, whether it is negotiating with the banks, helping you to sell your home, etc. They usually pull out a lot of "forms", ranging anywhere from 50 to 100 (or more) pages, which makes you feel overwhelmed, that they need you to sign. They usually say that these are all of the necessary forms to allow them to talk with the lenders on your behalf to try and negotiate so you can keep your home. Some of them may charge you an upfront fee for this "service", usually no more than $495.

While you are signing these "forms", there is one in there that you may not notice or not know exactly what it is for. It is called a Quit-Claim Deed (California). They typically explain this form as pulling a title report from the county assessor's office or checking to see what liens are on your home, etc. By signing this form a congratulations are in order! You just signed away all of your ownership rights to your home!

As soon as you sign a Quit-Claim deed, the con artist will usually drive straight down to the county recorders office, record the deed and is now the legal owner of your home. The next day they start the eviction process to get you out of your home, usually in less than 30 days, sometimes in as little as two weeks. But wait, that isn't the worst part. While in the process of evicting you, they put the house up for sale, usually way below the actual market value, to get it sold fast. Sometimes they even have "investors" who will buy these homes right from them within a few days.

So within a matter of a week or two, you have lost your home, been evicted from it, and had it sold from under your feet, with little or no warning. The worst part is that it is almost impossible to stop once the process gets started.

How to Protect Yourself

First, anyone who comes knocking at your door claiming to have solutions to your problems should be the first clue that something isn't right. Now granted there are agents and loan officers who are out there who do want to help, so you will have to determine if you want to talk with them.

Second, if they pull out a lot of forms for you to sign, ask for a few days to review them. If they refuse, and some will, politely tell them to get the hell out of your home. If they agree then review all of the forms. Write down any questions you may have about any of the forms and go over them with them. If you see a Quit-Claim Deed, tear everything up and throw it in the trash. There is no way of telling what else they are trying to do.

Unless you are listing your house (which is where all of the forms come in), the only form they need you to sign is an "Authorization to Inquire" form. It will need to have your lenders information including loan number and contact information, Social Security Number, Birthdays (Some lender require this) and your signature, as the lenders will make sure they match. They also need a copy of your mortgage statement or coupon and if you have it, a recent letter showing the amount you are behind.

Third, if they charge an upfront fee, it will be up to you to pay it or not. Some con artists and legitimate short sale/foreclosure experts charge this, the only difference is, the legitimate experts do it because of the paperwork and time involved, whereas con artists just want to milk you dry of your hard earned money. Also keep in mind the fee is completely negotiable.

Fourth, and here is where common sense comes in, If it sounds too good to be true, it always is!

Remember to take some time and think about it. If you aren't sure, seek out advice from other experts such as real estate agents, loan officers, the new government hotline and even attorneys. Never be afraid to discuss your situation with people who can help you. If you don't then you may never know if you could have done something different or really gotten help.

Just because you are facing foreclosure doesn't mean you are a bad person. Maybe you lost your job or got injured. Maybe you made a bad decision or bad investment. Who hasn't? The point is we all have at one point or another and that doesn't make us bad. We just learn from it and move on.