Your guide to real estate fraud

Foreclosure Rescue Scam

October 22nd, 2014 Posted in Scams | Comments Off

You’ve probably seen advertisements for foreclosure rescue specialists claiming that they can save your home and if it sounds too good to be true, it probably is. They might appear to be totally sympathetic, but they’re only there to get the title away from you. So-called foreclosure rescue specialists will ask you to sign a warranty deed, quitclaim deed, grant deed, or other sorts of property deeds while making promises that they will be unable to fulfill. Read the rest of this entry »

Multi-Level Marketing in Real Estate

October 15th, 2014 Posted in Real Estate Fraud | Comments Off


These days “fraudsters” are becoming more inventive. One type of real estate fraud is done by a supposedly “new” multi-level marketing company. In countries that are “havens” of networking companies,this is especially true and it works like a magnet for retirees, overseas workers, anybody who wants to have their own house and lot, housewives, practically anybody who wants to earn big, and those who have savings and are looking for a business to put their hard earned money into. These companies would attract people with a ready networking group, whose members are each willing to invest a considerable amount of money, telling them that for every recruit , they reach a certain sales level position in the company, and they will also earn from the cash investments of their recruit up to the nth degree PLUS the PLUM, which is their “dream home”. This is where fraud sets in. If the networker has not done his homework, meaning the company was not given a thorough background check as to its company history including its affiliates, reliability, credibility and capability to deliver products (actual houses that are already built and ready for occupancy), then they could be in for a shock and total disappointment not to mention the loss of their investment, because there is no actual house and lot that will be given.These companies usually develop tie ups with developers/building contractors to show prospective investors that they have the capability to build houses. However, the usual scenario is that the networking company uses the people’s investment to finance their other businesses, a method which creates an adverse effect. Eventually, a number of investors have fulfilled all the requirements for them to be entitled to their “dream home” but it (the house) can’t be built and given to those entitled to it yet because there is actually no money that can be used to do so. The recruit’s dream home remained just that – a dream!

Straw Buyer

October 8th, 2014 Posted in Real Estate | Comments Off

b7.jpgA straw buyer is employed to acquire a property for a shareholder who may not have qualifications for a loan due to numerous property loans. Alternatively, the investor has the purpose to resell the property within months for profit. While the property flipping scheme had legitimate and legal intentions, the investor faces fraud charges for the deception used to purchase the real estate.

Counteracting real estate fraud

October 1st, 2014 Posted in Detection | Comments Off
agency office
There are many ways to counteract real estate frauds to avoid being victimized. One of the most common ways is by consulting a lawyer or expert before entering into any real estate loan contract. However, one should make sure the lawyer or expert consulted is a truly trusted and knowledgeable professional with regard to law and real estate transactions. You don’t want to be doubly victimized by scheming professionals who clothe themselves with a false “you can trust me” cloak, do you?

If you really want to feel secure and safe when transacting real estate business but you are wary about the trustworthiness of your agent or lawyer, you can seek assistance from BasePoint Analytics. BasePoint Analytics is a firm that provides full-service fraud diagnostics and custom analytic services that help you measure losses and minimize exposure. They do this by deploying advanced analytics and optimizing your processes within the existing production environment. Now isn’t that smart?

The Flipper Fraud

September 24th, 2014 Posted in Detection, News, Real Estate Fraud | Comments Off

This occurs when someone buys a property in bad shape for a cheap price. Say $50,000. They make some cosmetic repairs spending say $1,000 and then sell it at an inflated price say $80,000 to a buyer who puts little or no money down.

The seller takes a mortgage back for a large amount, say $78,000, and gets a phony appraisal based on the inflated sales price.

You are then offered the mortgage at a discount at what looks like an attractive yield.

Soon afterwards the buyer stops making payments and moves out. Leaving you with a trashed house.

The key to this fraud is the inflated appraisal. Remember that appraising is an art not an exact science. Nonetheless an appraisal should be within 10% of the true value of the property.

This fraud can be hard to spot. Many legitimate investors DO buy properties for much less than their true value and are able to genuinely sell them for a higher price.

  • The key is to check out the comparable properties on the appraisal form and satisfy yourself that they are truly comparable.
  • Try to specify the appraiser and not use one provided by the investor.
  • Check the credit rating of the new borrower. Especially if they have only put down a small down payment.
  • Be wary of mortgages for sale that have not been aged, that is, a number of payments made on them.


Avoiding deception

September 17th, 2014 Posted in Information | Comments Off
man walking away
One time or another you get into business deals involving real estate. To protect you from rampant scams, you should always be aware and quick witted. Remember that scammers are wily people. They have a way with people. They have that acumen to charm people.

The No. 1 rule to keep in mind is to keep away from real estate transactions which are not yours. If it is not your house that is being sold, keep out. Or if it is not you who is buying the house, stay away. Bear in mind too, that if you feel you are not comfortable with certain terms and conditions of the contract or transaction, tell your lender or lawyer right away. Remember that holding your peace is tantamount to acceptance and conformity. And better still – withdraw from the deal. Period.

Caution to fraudsters

September 10th, 2014 Posted in Information | Comments Off
handcuffed businessman
In their desire to meet or surpass their sales quota, real estate agents help their unqualified clients to qualify for housing loans by manufacturing fake documents such as employment history and credit record.

Fraudsters run the risk of facing rigid punishments. In the above scenario, the buyer, seller and agent can be held equally guilty for collaborating in the execution of real estate fraud. Though the seller may seek remedy by invoking good faith, still his allegation is subject to burden of proof.

Sellers must therefore be cautious enough by making sure the agent and the buyer are not in any way trying to defraud the sale. He can do this by ascertaining the authenticity of documents and other pertinent requirements involved in the said real estate transaction.

Reporting real estate fraud

September 3rd, 2014 Posted in Updates | Comments Off
According to FBI Director Robert Mueller, it would be more advisable for a company to report its own misconduct to prevent further complications later on once the Department of Justice and the FBI takes a hand in the state of affairs of said erring company.

Mueller said in real state fraud cases, individuals involved have likely been in the business for so long that they cannot afford to lose the trust and confidence of their clients and shareholders. He also said the executives can always give rationalizations and wash their hands from guilt and participation in the fraud, but no matter, their company was involved anyway and to try to steer clear from the responsibility is a big risk on their business. Therefore, Mueller said, a company should better remedy or correct its own bad behavior to be able to start anew and regain the faith of its shareholders and business associates.

Mortgage Fraud

August 27th, 2014 Posted in Detection, News, Real Estate Fraud | Comments Off

There are 2 type of mortgage fraud.

  • Fraud to get a property
  • Fraud to make a profit

The first is were someone lies about facts to get a loan to buy a property.
The second is where someone lies about facts to make a profit.

Fraud is committed by falsifications in the following ways:

1. Loan application fraud. Where an applicant lies about their income or their job. Perhaps the down payment they are making was given to them by the person selling them the home and the value of the home inflated to cover it.

2. Exaggerated appraisals. Appraisal is an art, not a science. Who can really be sure just how much a better view, or a swimming pool (for example) adds to the value of the property? The buyer wants the house, the seller wants to sell the house, the real estate broker wants to make the commission, the mortgage broker wants to make a commission. There is a lot of pressure on that appraiser to massage the figures a little to create a value that makes all these people happy.

Not to mention the possibility that a crooked appraiser could be in league with a crooked seller or borrower to give appraisals that are grossly exaggerated.

3. Falsified or fake credit reports. It’s really not that hard to use modern technology to “clean up” a credit report by copying it and “losing” some bad stuff.

4. False income. Applications can give the phone number, not of the company where the person supposedly works, but of a friend. The answer, look up the phone number of the employer in the white pages. Listen out for tell tale sounds, like children in the background in a supposed office setting.

5. Forged tax returns. Easy enough to fake using products like TurboTax ® etc. The answer, ask the borrower to sign Form 4506 and get a copy direct from the IRS. Click here for a copy for form 4506.

6. Fake title insurance.


Fraud on the rise with the hard times

August 20th, 2014 Posted in Information, News | Comments Off

With these hard times upon us all, more and more people are looking for ways to help boost their current financial situations. Often times it’s these people who fall pray to scammers looking to take advantage of the situation. It is important that you ignore or immediately delete any suspicious emails asking for personal information. Any legitimate financial institution what needs that kind of personal information will not just send you an email. Also, be wary of companies offering loans even for those with low credit ratings the modus operandi is to have people pay them a supposed processing fee, and once that fee is paid, then the customer doesn’t hear from the company again. It’s a sad fact that many people are taking advantage of the situation, but you need to always be alert and careful when dealing with your money.