Fraud in the housing sector is a significant issue that can have disastrous effects on homeowners, renters, and the overall economy. This industry is plagued by a wide variety of fraud, from title fraud to rental fraud. These involve strategies to trick and swindle homeowners, frequently leading to substantial financial losses or property theft. Homeowners and renters can help to prevent these crimes by being aware of the different types of real estate fraud and taking precautions to protect themselves.
What is Title Fraud?
Title fraud is a type of real estate fraud that occurs when someone fraudulently obtains property ownership by stealing the property owner’s identity or forging documents. The fraudster will use false identification and forged signatures to transfer the property title to themselves, allowing them to sell the property or take out a mortgage.
In title fraud, the victim is typically the valid owner of the property, who may not realize that their property has been fraudulently transferred until it is too late. This fraud can have serious consequences, including financial loss and legal complications.
How does this scam work?
- The criminal obtains the personal information of a homeowner, such as their name, address, and date of birth. This can be done through various means. This includes stealing mail, hacking computer systems, or buying information on the dark web.
- The criminal forges documents, including a fake deed or transfer of ownership document, and registers themselves as the property’s new owner with the government land registry office. They may also change the mailing address on the property to their address. This is done to intercept any correspondence related to the property.
- Once the criminal has registered as the new owner, they can use the property as collateral to obtain a mortgage from a lender. As the lender believes that the criminal is the rightful owner of the property, they provide the mortgage without the knowledge or consent of the valid owner.
- The criminal then pockets the mortgage funds and disappears. Thus leaving the valid owner with the debt and the risk of losing their home.
How do you think you could avoid it?
To protect against title fraud, property owners should regularly check the title of their property and monitor their credit reports for any unauthorized transactions or changes. Homeowners should also be wary of unsolicited offers to purchase their property or take out a mortgage. They should verify the identity of anyone they are dealing with in real estate transactions, including apartment rental agencies. They should also be cautious about sharing their personal information and only do so when necessary.
What is Rental Fraud?
Rental fraud is a scam where a fake landlord, property manager, or agent creates a bogus rental property ad. They then convince a renter to pay a deposit or rent money upfront. Afterward, the scammer disappears. The renter realizes they have been scammed when they attempt to move in and find the property doesn’t exist, is already occupied, or is not available for rent. It is challenging to track down the scammer, and the victim loses their money.
How does this scam work?
- The fraudster will create a fake rental listing for a desirable new apartment at a below-market price to attract potential renters. They may use online classified ads, social media, or other websites to promote the listing.
- When a prospective renter responds to the listing, the fraudster will ask for personal information and payment in advance to secure the rental. This may include a security deposit, the first and last month’s rent, or application fees.
- After the payment is made, the fraudster will provide the renter with fake keys or access codes to the rental apartment or, in some cases, no keys. The fraudster will typically make excuses for delays or issues, such as saying that the property is undergoing renovations or that they are out of town.
- When the renter arrives at the property, they will discover that it is unavailable for rent or cannot access it. They may also find that the property is already occupied or that the owner or landlord needs to learn of the rental listing.
- The renter is left without a rental property and cannot contact the fraudster. In some cases, the fraudster may continue to demand additional payments or personal information from the renter.
How do you think you could avoid it?
To avoid rental fraud, it’s essential to do your research before responding to a rental listing. Be cautious of deals that seem too good to be true, and verify the legitimacy of the landlord or property owner. This can include checking the property on legitimate rental websites or through reputable real estate agents and apartment rental agencies. Also, check online reviews and ask for references. Be wary of providing personal information or payment in advance. Also, if you cannot physically visit the property before signing a lease, please ask for a video tour or virtual walk-through to ensure the property is legitimate.
What is Mortgage Fraud?
Mortgage fraud is a type of real estate fraud in which an individual or group of individuals fraudulently sells a property without the knowledge or consent of the valid owner.
How does this scam work?
- The fraud typically starts with organized crime groups looking through publicly available property records. They find homes without a mortgage or with a small one but with significant equity. These properties are then targeted for the scam.
- The fraudsters use stolen identities and hire “stand-ins” to pose as tenants, giving them access to the property. They may also use “stand-ins” to impersonate the homeowners to mortgage the property. The fraudsters move quickly to complete the mortgage to avoid detection.
- The fraudsters may use fake documents or falsify existing ones to make the mortgage appear legitimate.
- Once the mortgage is complete, the fraudsters receive the funds and quickly move them from the fraudulent bank accounts. They may also convert them into cryptocurrency or gold bullion. This makes it difficult for authorities to track the funds and recover them.
How do you think you could avoid it?
Homeowners should take precautions to protect themselves by monitoring their credit reports and checking out for any unusual behavior on their property. Additionally, they should exercise caution when giving out personal information or signing documents. Homeowners can also verify their property records and ensure no errors or fraudulent activity by working with a reliable real estate agent or lawyer.
Conclusion
In the end, exercising caution and vigilance is crucial when engaging in any housing transaction. Also, you can work with reputable agencies and agents for added protection and support.
Homeowners and tenants should be aware of the red flags to safeguard themselves from scammers, who are constantly looking for new ways to trick and cheat. Take precautions to confirm the legality of any housing-related transaction to prevent falling prey to these scams. It’s essential to be informed and look for professional advice when necessary.