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5 Common Real Estate Fraud Schemes You Need To Know

Whether you’re buying your first home, or you’ve been through the home-buying process before, there is a risk for falling victim to real estate practices that are shady or fraudulent. Real estate fraud schemes can lead to buyers losing their houses right out from underneath them, bankruptcy, damaged credit ratings, and legal fees associated with escaping from the tangled web of a real estate fraud.

Some of the most common fraud schemes include:

  • Foreclosure Rescue – Companies that claim to be able to “rescue” people from foreclosure prey on those who are behind on mortgage payments and whose mortgage company has begun foreclosure proceedings. These companies tell desperate people that their home can be saved with a “temporary” title transfer to the rescue company. Once they have the title, these companies often sell the homes and pay the original owner a fraction of what they could have made selling the property. On top of everything else, the original owner remains accountable for the original mortgage payments that are due.
  • Fraudulent Loan Origination – This is a situation where a real estate professional helps an unqualified buyer obtain the money necessary to purchase a home with an FHA-insured mortgage. The real estate professionals often promise the buyer that they will qualify for much more than they are able to repay, sometimes falsifying official documents to help the buyer obtain property beyond their ability to pay.
  • Equity Skimming – When a buyer wants to take out a large mortgage, they may convince the seller to re-list the house for an amount that is absurdly high compared to the actual value of the home. This allows the buyer to obtain a larger mortgage from their bank, pay the seller the original asking price for the home, and pocket the rest of the money. The house typically ends up in foreclosure in this situation.
  • Home Improvement Fraud – This involves real estate agents or others who fraudulently apply for home improvement loans in the name of people who do not exist. Real estate agents can alternatively use personal information from unsuspecting buyers to obtain these loans.
  • Mortgage Elimination – Mortgage elimination programs promise borrowers an easy way out of their mortgages in a short amount of time (often a year or less). By convincing borrowers that there are loopholes that will let them out of their mortgages, these companies charge premium prices for their “services,” which turn out to be fictitious.

Don’t take any chances with your finances; if you think you’re being lured into a real estate fraud scheme, contact the team here at the BCN Law Firm in Clermont. Our high level of experience and comprehensive approach to each case allows us to make sure you avoid any potentially fraudulent situations. Call us today at (352)-394-2103 to schedule a consultation.