Imagine yourself, a homeowner, arrested for mortgage fraud that you did not commit. Can this happen? It can and it has. How do we identify when this is happening to us?
The scam involves a “Straw Buyer”. This is someone that is generally very trusting and open to the cons game. The “Straw Buyer” is an unknowing participant in the scam.
The con may pose as a real estate investor who has located a hot property and has secured a contract to buy the property that will yield a pretty penny with a little improvement and a quick flip. He uses a fake identity and has the general documents needed to operate under this alias. He indicates he is leveraged to the hilt and needs to sacrifice a good portion of the profit expected on this new flip opportunity with someone able to qualify for the mortgage. The intent, you are told, is to fix the place up and resell it. The investor indicates he also has an appraiser willing to give a really healthy value to the property which you agree will be great for helping get the loan and agree to the deal. It sounds like a good deal on the surface but the scam has everything it needs to occur.
The victim now takes out a mortgage at more than the house is really worth and signs over the deed upon which the victim gets a small amount of the proceeds and the con gets the rest. The victim expects that after 6 months the house will be fixed up and resold but the con never puts a dime into the house, nor makes any payments. He leaves the scene with the majority of the equity in the home and the straw buyer gets arrested for mortgage fraud when it goes into default.
There are many advertisements in the papers, on street corners, etc indicating that investors are looking for apprentices…earn $20K per month! BEWARE of the various lures that the con artists use to attract unsuspecting buyers. Remember, if a deal seems to good to be true…it is.
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