With its high property values and active real estate market, California is particularly vulnerable to several types of real estate and mortgage-related crimes. With that, Lawyers Realty Group urges Californians to be cautious and educated on the different types of real estate and mortgage crimes prevalent in the real estate industry.
Many of these crimes prey on the complex nature of the home-buying or refinancing processes, making them difficult for the average consumer to recognize. Below are the most common crimes that could present a threat to California consumers, along with tips for avoidance. It is important to note that even well-meaning individuals who are unaware of the full consequences may find themselves facing legal scrutiny if they participate in or enable fraudulent activity.
1. Deed and Title Fraud
Deed and title fraud are a growing concern, particularly in California’s more populated areas. Scammers forge deeds and use fake identities to transfer ownership of properties. Once the property is in the fraudster’s name, they may sell it or take out a loan against the property, leaving the original owner unaware until it is too late.
Tips for Avoiding Deed and Title Fraud:
* Regularly monitor your property records for unauthorized transfers or changes. If your county recorder’s office has a deed notification program, sign up to receive notices.
* If you receive any unusual or unsolicited documents, consult with a title company or attorney before taking any action.
* Consider purchasing title insurance, especially for properties in high-risk areas.
* If someone contacts you asking to transfer ownership of your property, verify their legitimacy.
2. Foreclosure Rescue Scams
Many homeowners facing financial difficulties may fall victim to foreclosure rescue scams. Fraudsters pretend to be experts who can help prevent foreclosure, but their real goal is to steal fees upfront without providing any real assistance.
Tips for Avoiding Foreclosure Rescue Scams:
* Never pay upfront fees for foreclosure help—legitimate programs will not ask for this.
* Always check if the company offering help is HUD-approved or affiliated with legitimate government programs.
* Seek assistance from a real estate attorney before agreeing to any services.
* Avoid deals that promise to immediately stop foreclosure or wipe out your debt.
3. Equity Skimming
Equity skimming occurs when a fraudster convinces homeowners who are struggling with payments to transfer ownership of their property, often with the promise of saving their home. Instead, the fraudster collects rent or mortgage payments from the homeowner and never pays off the original mortgage.
Tips for Avoiding Equity Skimming:
* Never sign over the title of your home to anyone claiming they can help you avoid foreclosure.
* Work only with reputable lenders, real estate agents, and housing counselors who don’t ask for ownership rights or power of attorney.
* Read all documents carefully before signing and consult an attorney if anything seems unclear.
* Be cautious of individuals offering to “rescue” you in exchange for quick decisions or immediate transfer of property.
4. Straw Buyer Schemes
Straw buyer schemes involve an unsuspecting consumer purchasing a home on behalf of someone else, often to hide the identity of the true buyer who may not qualify for the loan due to poor credit or other reasons. This can result in the consumer, aka the straw buyer, being held liable for a loan they can't afford, leading to potential foreclosure, negative impacts to credit, and other risks.
Tips for Avoiding Straw Buyer Schemes:
* Always verify the identity and financial standing of anyone you are dealing with in a real estate transaction.
* Never agree to buy property on behalf of someone else without understanding the full risks and consequences.
* Make sure all mortgage and loan paperwork reflects accurate information and fully discloses the true buyer.
* Work with a reputable lender that follows all appropriate verification procedures.
5. Mortgage Elimination Scams
Fraudsters offering mortgage elimination scams will tell homeowners they can "eliminate" their mortgage debt through a legal loophole for a hefty fee. These offers are completely false, and no such legal loophole exists.
Tips for Avoiding Mortgage Elimination Scams:
* Be highly suspicious of anyone claiming they can cancel or eliminate your mortgage for a fee.
* Always seek advice from a trusted financial advisor or housing counselor before paying for any mortgage “relief” services.
* Report suspicious mortgage elimination services to state regulatory agencies or law enforcement.
6. Elder Financial Exploitation in Real Estate
Scammers often target older adults with high-value properties, taking advantage of their trust to persuade them to sell or transfer their home under suspicious circumstances.
Tips for Avoiding Elder Financial Exploitation:
* Always involve trusted family members, friends, or professionals in financial decisions, especially for older adults.
* Be cautious about unsolicited offers, especially those targeting seniors with no prior relationship.
* Avoid signing anything without thoroughly understanding the document—consult with an attorney or financial advisor first.
How Consumers Can Protect Themselves
California’s real estate market presents a number of risks to consumers, but with due diligence, research, and professional assistance, you can protect yourself from falling victim to these common frauds. Always trust your instincts and seek advice from trusted professionals before making any major financial decisions.
Contact Lawyers Realty Group for Expert Help
Before signing any long-term listing agreement, quick cash purchase contract, sale-leaseback arrangement, or home equity investment agreement, seek independent legal, financial, and real estate advice to protect your interests. These companies employ sophisticated legal teams and draft complex agreements that can trap you for decades or strip away your equity.
If you're facing financial stress and want to protect your home equity, don't go it alone. At Lawyers Realty Group, our Attorney/Realtor® provides tailored insights to navigate these predatory schemes, remove improper liens, explore safe alternatives like strategic listings or loan modifications, and help you retain your hard-earned equity.
Call (949) 264-0966 for a free legal analysis with no obligation. We're here to fight for California homeowners and help you keep what you've worked so hard to build.
