Mortgage fraud has become prevalent around Georgia and especially in the metro Atlanta area. If you are facing the possibility of losing your home to foreclosure or are behind on your mortgage payment, you could be targeted by scammer. With the possibility of losing your home, you are willing to try anything to save your home. Scam artist know this and will prey on distressed homeowners.
Scotty Ball, a partner at Stewart, Melvin & Frost who specializes in residential and commercial real estate law, will discuss some of the fraud schemes that target homeowners.
Question: What is the most common scheme that targets at-risk homeowners?
Scotty: There are unscrupulous people that will identify homeowners who are in foreclosure through legal advertisements in the newspaper. They will approach the homeowner and tell them they can save their home by transferring the deed or putting the property in the name of an investor by signing a quitclaim deed.
They sometimes tell the homeowner they can pay rent for a year and repurchase the property when their credit has been reestablished. However, after the ownership is transferred, the perpetrators of the fraud will sell the property, stealing the equity from the sale of the home or fees paid by the homeowner. The homeowner is left with nothing.
Question: What about homeowners who are just behind on their payments. How are they targeted?
Scotty: They are targeted by loan modification schemes. The way it works is a homeowner who is behind on their mortgage payment will be approached by a person who claims to be a financial advisor or debt relief consultant. They may even claim to be affiliated with a government program for loan modifications. They will offer to renegotiate the terms of the homeowner’s loan with the lender.
For their service, the scammers will demand large fees upfront. They will either not negotiate at all with the lender or negotiate unfavorable terms. This is similar to a foreclosure rescue scam. A homeowner is out a large sum of money and with no relief for their loan.
Question: What other ways are scam artists committing mortgage fraud?
Scotty: A scam artist will legitimately buy a property but have it falsely appraised at a higher value and then quickly sell it.
What makes the property flip illegal is the appraisal information is fraudulent. These schemes can also involve falsified loan documentation, inflated buyer income, or kickbacks to buyers, property/loan brokers, appraisers and title company employees who help perpetuate the fraud.
Question: What can homeowners to protect themselves?
Scotty: Get referrals for real estate and mortgage professionals and check their licenses local, state or federal agencies. Understand what you are signing. Be wary of strangers making unsolicited contacts. If it sounds too good to be true, it probably is. The best thing you can do is walk away and report the incident to the Georgia Department of Banking and Finance.