Fraudsters attempting to swindle senior citizens is nothing new, but California real estate scam artists are taking this depravity to a whole new level. These criminals are using brazen tactics to steal equity from elderly California homeowners, leaving them extremely vulnerable to foreclosure and financial ruin. The schemes are wide-ranging, with some posing as non-profit groups or “homeowner advocates” who are offering “free help” to seniors. They go on to use that trust to steal hundreds of thousands of dollars from their victims.
In a publication entitled "Common Fraud Schemes - Fraud Target: Senior Citizens," The Federal Bureau of Investigation offers the following reasons, among others, that such targeting occurs:
- Senior citizens who own their homes are likely sitting on a substantial "nest egg", especially if they live in California. They also often have excellent credit, which make them particularly attractive to con artists.
- People who grew up in the 1930s, 1940s, and 1950s were generally raised to be polite and trusting. They often can’t fathom the level of deceit that is inherent in these schemes and are, therefore, more easily exploited. It is difficult or impossible for these individuals to say "no" or simply hang up the telephone.
- Older Americans are less likely to report a fraud because they don't know who to report it to, are too ashamed about having been swindled, or simply don't realize that they have been defrauded. It is especially difficult for elderly victims to report crimes if they are concerned that relatives may deem them mentally incapable of handling their own financial affairs.
Most Prevalent Real Estate Scams
The high-stakes California housing market makes it particularly attractive to criminals. The methods of fraud are seemingly endless, limited only by the creativity of the schemers. The most prevalent types include:
Foreclosure Rescue Schemes/ Illegal Foreclosure Consultants
Following the mortgage meltdown in 2007/2008, fraudsters began to focus on what we call “foreclosure rescue” schemes. These include fraud in the areas of loan modification negotiations, fake forensic audits, useless mass joinder lawsuits, and foreclosure postponement services. The scams could also include bankruptcy fraud as a means of slowing the foreclosure process while the fraudster collects exorbitant monthly fees from the victims.
Fast forward to today where we find foreclosure rescue con artists and illegal “foreclosure consultants” deploying even more sophisticated equity-stripping tactics. In the current scam, fraudsters offer to help seniors avoid foreclosure by negotiating with lenders on their behalf. However, they charge exorbitant and illegal fees while completely failing to deliver on their promises. For the criminals, it’s quick and easy money. They will sometimes charge illegal up-front fees and/or directly withdraw money from the victim’s bank account monthly. In the end, the senior homeowners are left in a significantly worse financial position than before.
In another, even more insidious iteration, the person offering the “free service” to avoid foreclosure is actually a scheming mortgage broker or real estate agent who is looking to make an illegal loan or to list and sell the home right out from under the senior citizen. Often, the foreclosure is completed without the senior homeowner realizing what has happened. Having been distracted by trickery and false promises, they could not avail themselves of legitimate foreclosure avoidance options that may have helped them remain in their homes and achieve true financial stability.
Hard Money Loans
One of the most common scams used to steal equity from seniors involves the hard money loan. In this scam, unscrupulous mortgage brokers, real estate agents and phony non-profit organizations offer high-interest loans to seniors who are in desperate need of cash. These loans often come with hidden fees and onerous terms that are designed to trap the homeowner in a cycle of debt. As a result, many seniors end up losing their homes and every cent of the equity that took them a lifetime to build.
Another scam to steal equity from aging California homeowners is referred to as “equity skimming”. In this scheme, fraudsters target homeowners who are struggling to make mortgage payments. They offer to take over the mortgage payments in exchange for the deed to the property. Once they have the deed and ownership of the home, they evict the senior citizen from of the home and then rent out the property or sell it, pocketing the profits and leaving the homeowner without a home or any of their equity.
Home Equity Sales Contract Act Violations
Home Equity Sales Contract Act violations (Cal. Civ. Code Section 1695 et seq) are also a common tactic used by scammers to steal equity from seniors. In this scam, the criminals are real estate investors looking to buy the property for substantially below market value. The distressed homeowner is boxed into a corner, facing foreclosure and needing to sell. The investors fail to provide the legally required disclosures, which include a right to cancel the sale. If the homeowner speaks up, they are threatened with a lawsuit by the criminals. In the end, the senior homeowner capitulates to the illegal sale and loses a significant amount of their equity.
Title fraud is a growing problem in the real estate market. In this scam, fraudsters blatantly forge documents and use false identities to transfer ownership of a property to themselves. Once they have control of the property, they may sell it or take out loans against it, leaving the senior without a home or any equity.
Reverse Mortgage Scams
In its discussion of common fraud schemes, the Federal Bureau of Investigation urges seniors to be vigilant when seeking reverse mortgage products. They report that "[r]everse mortgage scams are engineered by unscrupulous professionals in a multitude of real estate, financial services, and related companies to steal the equity from the property of unsuspecting senior citizens or to use these seniors to unwittingly aid the fraudsters in stealing equity from a property. Seniors are frequently targeted through local churches and investment seminars, as well as television, radio, billboard, and mailer advertisements."
In some reverse mortgage fraud schemes, the con artist will endeavor to convince seniors to take money out of a home's equity via a reverse mortgage and then allow the con artist (purportedly a financial advisor) to purchase an annuity or annuities for the homeowner.
A true reverse mortgage can be an excellent option for a homeowner, helping them to remain in their home and achieve financial stability throughout their retirement years. However, in the hands of an unscrupulous broker, seniors are at serious risk of foreclosure and financial ruin.
How To Protect Yourself
Elderly California homeowners should be EXTREMELY cautious when dealing with lenders, real estate agents, and other professionals in today’s high-stakes real estate market. Senior citizens should be especially leery of any purported “non-profit organization” or “housing advocate” that calls them directly or mails information directly to their home. This is a sure sign of fraud, as legitimate non-profit agencies do not market in this manner. They should also seek the advice of trusted family members, friends, or legal/financial advisors before making any major decisions or signing any documents.
If Something Sounds Too Good To Be True, It Probably Is!
If a senior suspects that they have been the victim of fraud, embezzlement or elder financial abuse in the real estate market, they should contact a reputable law firm that specializes in helping seniors. Lawyers Realty Group in Orange County, California is one such firm that provides legal services to aging California homeowners who have been victims of real estate fraud. The Lawyers Realty Group team has a deep understanding of California's real estate laws and can help seniors navigate the complex legal system to protect their rights and recover any losses they may have suffered.
Contact Lawyers Realty Group Today at (949) 264-0966
Never let anyone pressure you into singing ANYTHING you don’t understand or that you can’t afford. Speak to an attorney immediately before you sign anything. Reach out to our expert Attorney/Realtor today at (949) 264-0966 for a free legal analysis of all of your options. We will outline the best course of action for you without any cost or obligation.
Lawyers Realty Group was established over 20 years ago to provide a higher level of professional representation for homeowners in difficult situations. By combining expert legal representation with comprehensive real estate transactional services, homeowners receive unparalleled service and protection.
Additional Ways to Avoid Being Victimized
Be Suspicious and Proceed Very Cautiously When Contacted By Strangers.
Unfortunately, real estate fraud is rampant. You must remain vigilant and listen to your instincts to protect yourself. Be EXTREMELY skeptical of unsolicited offers of help like direct phone calls or visits to your home. This is an aggressive tactic by scam artists and fraudsters.
Remember: You are under no obligation to talk with strangers or be polite to them about your personal financial affairs. These criminals are very savvy. They are trained to gain your trust so that they can take advantage of you. You must assert your right to say “NO” and hang up the phone or close the door to protect yourself.
Use A Licensed ATTORNEY/REALTOR When You Need to List and Sell Your Home.
When engaging the services of people offering assistance in the areas of mortgages, foreclosure rescue, and real estate, do your research and look for reputable professionals who are licensed by CalDRE. You can check for credentials at the CalDRE website (www.dre.ca.gov) and, if the person is an attorney, you can visit State Bar website (www.calbar.ca.gov). Make certain that the person you work with is licensed by the State of California and has not been disciplined for ethical violations. For comprehensive protection, both financially and legally, during the sale of your home, it is advisable to work with someone who is licensed as BOTH AN ATTORNEY AND A REALTOR.
Never Pay with Cash, or Wire Cash to Anyone, In Connection With Real Estate Transactions: Also, Be Certain To Protect Your Personal Information, Such As Social Security Number, So Scammers Cannot Steal Your Identity.
Many victims of real estate fraud have either paid in cash or wired cash to the fraudsters. With extremely limited exceptions, cash payments and money that has been wired can never be recovered. In addition, cash payments do not leave an adequate paper trail for prosecutors in criminal trials to prove payments were rendered. If you pay a real estate professional any money, be sure to use a check or credit card and get a receipt.
As always, be sure to remain vigilant about sharing your personal information. Identity theft is rampant. Personal and financial information should be provided only when deemed absolutely necessary.
Never Pay Anyone Advance Fees for Home Loan or Foreclosure Relief Services. Never Sign an Agreement for A Home Loan That You Cannot Afford. Never Sign a Real Estate or Home Loan Agreement That You Do Not Understand or Have Not Read or Which Contains Blank Spaces.
Those who commit fraud will coerce you to act quickly so that you do not have time to think carefully about what you are doing. Do not be pressured into signing documents or paying money. Slow down and properly research the license status, experience, and references of the person you are working with.
Be sure to get everything in writing and do not leave blank spaces in documents that you sign. Always retain copies of the any documents you have signed.
Anyone Can Advertise on Television, Radio, Newspapers, Magazines, Or Internet (Including Fraudsters Who Lack Appropriate Licensing).
With very rare exceptions, advertisements on broadcast media are not verified for truthfulness, honesty, or compliance with the law. Therefore, you cannot take for granted that what is advertised is always lawful or truthful.
Scammers spend an enormous amount of money to create convincing and professional-looking advertisements and marketing materials, all of which are intended to trick you into giving them your hard-earned money or property.
Just Because Someone Looks and Sounds Like a Professional Does Not Mean That You Can Trust Them.
Scammers specialize in gaining your confidence by providing you with false hope and easy answers to your real estate difficulties. Many of those who commit fraud are good-looking charmers. They are very convincing. To protect yourself, you must always verify, verify, and then verify again before extending your trust to someone who asks you for money, personal information, or property.
Never Transfer or Sign Your Home Over to Anyone Who Claims That Such a Transfer Will Help You Repair Your Credit or Keep You in Your Home. Also, Never Sign A "Power of Attorney" Giving Rights to Your Property or Money to Anyone You Do Not Personally Know and Trust.
Criminals posing as real estate specialists will often recommend that you transfer your property deed or title to them, give them a "power of attorney", or encourage you to make your home loan payments directly to them. Each of these suggestions signal fraud, and you should cut off all contact with the company immediately.
Periodically Check the Title to Your Home Just Like You Check Your Credit Reports. Take Immediate Action If You Detect Fraud.
Monitoring your property title records will alert you to any suspicious documents have been illegally recorded against your property. If you discover you have been a victim of fraud, take immediate action by reporting the illegal activity to government and enforcement authorities.
In these cases, it is advisable to seek legal representation to unwind fraudulent documents and "clear" and "quiet" your property's title. Sometimes a City Attorney or District Attorney may be able to obtain a recordable court order quieting the title in connection with the criminal prosecution of the fraudsters for forgery, grand theft, and other criminal counts.