In one type of mortgage rescue scam, a predatory "real estate investor" steals the equity a victim has built up in their home. Most of the time, the con artist will tell the victim that they want to help keep the house from going into foreclosure. This "real estate investor" will tell the victim that he or she will buy the house himself or herself, or that he or she will make arrangements for another investor to buy the house.
The scammer says that he or she will rent the house back to the victim for 12 to 24 months so that the victim can get back on their feet financially, fix their credit, find a better job, etc. They say that at the end of the lease, when the victim's finances are better, they will sell the house back.
As part of the scam, the "real estate investor" will often also try to sell the victim services to fix their credit, find them a mortgage broker, or find them a job. At some point, the scammer will force the victim out of their home. They will then sell the house and keep the equity.
As mortgage rates rise and more homeowners have to pay more on their mortgages, government officials are seeing more of this kind of scam.
Scammers often use company names that sound like they are connected to a church. Most of the time, they meet their victims through social groups or churches.
A lease-back deal is another type of mortgage rescue scam that is based on a number of lies. The con artist doesn't want the victim to be able to keep the house. The scammer rents the house back to the victim with rent payments that are as high as or higher than the mortgage payments that the victim was not making in the first place.
Most of the time, the scammer doesn't deliver the promised credit repair, mortgage broker, or job placement services that would make it possible for the victim to buy back the property at the end of the lease. As soon as a rent payment is late, the con artist will try to get the owner kicked out.
Once the owner has been kicked out, the con artist will sell the house, pay off the mortgage, and keep the equity. In the end, the scammer ruined the victim's credit and didn't pay off all of their mortgage debts, even though they sold their house.
This con comes in many different forms. The con artist will sometimes buy the house from the victim for less than the market price. On the loan application, the scammer may say that he or she plans to live in the house, but there may already be a deal in place to rent the house back to the seller, which is not shared with the lender. This lie makes sure that the loan will be approved and gets the scammer a better interest rate on the mortgage than if it had been an investment loan.
Sometimes, the con artist will use a "investor" to buy the house below market value with a mortgage loan. The "investor," who is usually another victim, will then give the house to the scammer right away, usually for a fee paid by the scammer. The "investor's" loan application will often say the property will be occupied by the owner, even if the seller already has a lease agreement in place. The fact that there is a lease won't be told to the lender.
Scammers find people who are easy to take advantage of through advertising, public records, or personal connections. Marketing can be as simple as putting up flyers or as complicated as sending out direct mail. Notices of trustee sales are available to the public at county recorders' offices, where you can find public records.
Churches or other community groups are often a part of personal networks. Professional networks can be used to find victims when the con artist is also a real estate agent, mortgage broker, loan officer, attorney, or appraiser and knows that the victim's finances are weak and that they are about to go into foreclosure.
Call the Department of Financial Institutions Enforcement Unit if you know people who are taking part in these kinds of scams.
