Mortgage scams aren’t new. In fact, they’ve been around for a long time. But they do seem to be gaining more popularity with identity thieves. These criminals aren’t conducting mortgage scams to get to your identity so much as they’re targeting your identity to get to your mortgage.
Why? Because there’s a lot of money in a mortgage scam. Whether the thief is trying to bilk you out of your home so they can resell it at an amazing profit, or is using your information to run a con game that ends with you paying out thousands of dollars and still losing your home, the identity thief wins. And you lose.
Your best protection from mortgage scams is to understand the kind of games that scammers play when it comes to your mortgage. Here are the top three:
Scam # 1: The Bait and Switch
Bait and Switch is an old scam used in a lot of different ways, but it’s probably most devastating as a mortgage scam. In this scam, scammers approach you about offering to help you out of a tight spot. Usually, the offer to buy your house at a reduced rate leaving the home in your name or they offer you a loan at some ridiculously low interest rate.
The scammers then have you sign a very complicated set of documents that are often forged bank documents. They’re not official in any way, but they look official. And when it’s all said and done, what you’ve signed is a “quit claim deed” to your house, putting it in their name. But you’re still responsible for the mortgage.
The scammers can resell your house (while you’re still in it) and before you know it all you have left is the payment on a house you don’t technically own any more.
Scam # 2: The Bailout
This is probably one of the most attractive scams making the rounds. The scammers offer to help you rescue your home from foreclosure by purchasing the home from you for slightly above what your remaining mortgage balance is. The deal is that you’ll stay in the house as a renter (and some even offer you free rent for a specified amount of time) and then you’ll purchase the home back at the same low price they bought it for.
What really happens is that you do this, and the scammers charge rent that is higher than the mortgage would have been. You can’t afford the rent, so they evict you, and sell the house at fair market value, making a ton of profit.
Scam # 3: No Help-Help
This is less of a mortgage scam and more of a plain old scam. In this iteration of a con game, scammers offer to help you prevent foreclosure on your home by assisting you with paperwork and phone calls to work out a deal with the mortgage company. They might even go as far as to suggest that you don’t have any contact with the mortgage holder during their “negotiations.”
What really happens is that the scammer charges you an exorbitant fee for the supposed service he or she provides. These are usually services you can accomplish on your own for free. And in truth the scammer probably never makes a single call or contact. The problem is, before you figure it out, your home is being foreclosed on. And the scammer has made away with thousands of dollars that you could have used to help bring your mortgage current.
Identity thieves will stop at nothing to make a little money. And they only care about your identity for as long as it helps them reach that goal. Once they’ve taken you for everything they can get, they’ll move on to the next victim leaving you to wonder what happened and how you can fix it. Be wary of anyone offering help, whether it’s help paying your mortgage or other bills that you might have. Chances are, the only help they’re interesting in providing is to themselves as they help separate you from your money.