Now that there are fears the economy is headed for a worsening recession, a scam from the Great Recession has resurfaced. Falling victim to it is extremely costly.
It has various names but it has one extreme result – victims end up signing over the deed to their home to a criminal. Once they do it, there is no way to recover.
During the Great Recession more than a decade ago, millions of Americans were in the midst of foreclosure and desperate to keep their homes. It led to scammers contacting distressed homeowners and offering a plan to help them avoid foreclosure.
The caller isn’t a foreclosure specialist. They have simply taken advantage of the local government’s database of property in foreclosure.
The schemes vary. The scammer might offer to help modify the mortgage to make the payments more affordable. Another variation has the homeowner signing over the deed to the property to a trusted relative who is not on the mortgage.
What the schemes have in common is the requirement that the homeowner sign several legal documents – one of which will transfer ownership of the property. Once the deed is filed, the homeowner will find they are now trespassing and can be evicted.
Can be combined with identity theft
As we reported in 2008, the early form of the scam often combined mortgage fraud with identity theft. If the criminal could steal the homeowner’s identity, the property could be transferred without the real owner being aware or having any contact with the scammer.
At the time, the FBI described it as a complicated crime that had several twists and variations. In most cases, though, it had a central theme.
- Con artists pick out a house to steal;
- They steal that homeowner's identity. They get their names and personal information -- and then make fake social security cards, driver's licenses, or other forms of identification;
- Con artists go to an office supply store and buy forms to transfer property;
- They forge the homeowner's signature on those documents and file them with the appropriate governmental office usually the county recorder of deeds office;
- Once those papers are filed, the deed to the house transfers to the con artists. And the home belongs to them.
Homeowners should remain vigilant
So far, foreclosure starts remain well below the number in 2008, but if the Federal Reserve continues to tighten interest rates it is likely unemployment will rise and with it, foreclosures.
There are some simple ways to avoid becoming a victim of this scam. For starters, be very leery of anyone who contacts you with what seems to be a simple solution to your problem.
If the “foreclosure specialist” gets aggressive, or uses high-pressure tactics to get you to accept their offer, you’re dealing with a scammer so break off any communication.
Above all, don’t sign anything. No matter what the scammer tells you, never sign over the deed to your home to a stranger.