In a perfect world, consumers – especially those engaging in very large transactions like buying or selling real estate – would never have to worry about being scammed. But we don’t live in a perfect world, far from it. The sad fact is that criminals are getting savvier by the day with respect to targeting and scamming various consumers. Statistics from the FBI’s Internet Crime Complaint Center show that in 2018 11,300 people fell victim to real estate fraud – with total losses of more than $419 billion. You simply must, then, know how to spot a real estate scam in Rochester. And a great way to do that is to understand some of the major scams.
Escrow Wire Fraud
This real estate scam in Rochester involves scammers stealing the escrow money. It typically works like this:
- You get an email, a phone call, or a text message from some person claiming to be affiliated with the title or escrow company.
- The person then gives you instructions about where to wire the escrow funds.
- You wire the funds to the given online destination.
- The scammers/thieves then abscond with your money. (And your options for and chances of getting it back are slim to none.)
The fraudsters in this real estate scam often set up bogus websites that look a lot like the title company’s or the lender’s site, and so they seem to be legitimate. These people also use certain spoofing tactics to make URLs, email addresses, and phone number look familiar (with only slight, almost unnoticeable differences), so no red flags are raised for the unwitting victims.
To spot and protect yourself from this real estate scam in Rochester, review the original documents form the lender and call the phone numbers given to verify everything before you send off any money. Also, it is out of the ordinary for anyone in a real estate deal to ask you to send money online. Senior Economist with First American Financial Corporation Odeta Kushi advises being “wary of any email or text requesting a change to wiring instructions you already have.”
Foreclosure Relief Scam
Another common real estate scam in Rochester is the foreclosure relief scam. Sometimes and often for reasons beyond their control people run into extreme financial hardship and get behind on mortgage payments. They are then desperate to avoid foreclosure and keep their homes. And that’s when the scammers rush in to take advantage of that desperation and financial vulnerability.
The scammers here get access to the public records of homes in pre-foreclosure and offer bogus foreclosure relief. They offer to save the home and lower mortgage payment if the homeowner just sends them a hefty up-front payment. They get the money, and then nothing ever happens – except that the homeowner is worse off than she was before.
So if foreclosure seems imminent, you should, according to industry watchers, “work directly with your loan servicer to modify your existing loan, request forbearance, or make some other arrangement.” If you get a call about this from someone who tells you not to talk to your lender, beware. That’s a sure sign that you’ve got a scammer on the line.
Loan Flipping Scam
Another real estate scam is the so-called loan flipping scam. What happens here is that a predatory, unscrupulous lender contacts a homeowner and persuades her to repeatedly refinance the mortgage, many times by borrowing a larger amount at each refinance. The victim gets stuck with high fees and points each time while being tricked into borrowing most or all or her home’s equity.
The people most vulnerable to this real estate scam in Rochester are older people who have significant equity, but who also suffer from cognitive impairment or physical disability. “Predatory lenders,” industry watchdogs explain, “convince homeowners they can help them find a better loan product or use a cash-out refinance to pay for home renovations to make their homes more accessible as they age in place.”
So beware of lenders who seek you out, contacting you out of the blue, when you haven’t requested or indicated that you need or want their help. You should also deal only with known and reputable banks and mortgage companies. If you are contacted by one you don’t recognize, that should be a red flag.
Unlicensed Agent Scam
Most realtors are licensed and committed to providing great service, but as with any profession, there are always a few bad apples in the barrel. And those bad apples are unlicensed realtors who sell property. What they do is, on selling a home to a buyer, deposit the escrow check in their own account instead of the escrow account. So the buyer is out the money, and the deal falls through.
A good way to spot and avoid this real estate scam is simply to check out the credentials and reputation of the agent in question. You should, for that matter, vet anyone you will be working within a real estate transaction.
Having a good real estate agent in your corner is probably the best way to spot and avoid a real estate scam in Rochester. For if you have a good agent, she will always be looking out for your best interests, whether you are a buyer or a seller.