While offering great opportunities for wealth creation and shelter, the real estate industry is full of fraudulent activities. The high value associated with property transactions will always entice fraudsters, leading to them crafting sophisticated schemes. Potential investors and homeowners can learn a lot from studying the types of real estate fraud.
Deldar Legal helps unpack the multifaceted world of real estate fraud, illustrating with specific examples to provide a clearer picture. Part of our role as a professional legal service is letting people know they have an outlet when extreme circumstances change your life.
Here are the five types of real estate fraud that people are most likely to encounter:
1. Title Fraud
Arguably one of the most devastating types of real estate fraud, title fraud involves the unauthorized transfer of a property’s title. Imagine waking up one day to find out you no longer own your house. This nightmare becomes a reality for victims of title fraud. And if you don’t have title insurance, you may not be eligible for restitution.
A classic example involves identity thieves using stolen personal information to impersonate the rightful property owner. They then sell the property or secure a new mortgage, leaving the actual owner inundated with debt. This means regularly reviewing property records to make sure no unauthorized changes occur is necessary.
2. Mortgage Fraud
Mortgage fraud is a complicated issue, affecting both financial institutions and individual homebuyers. Picture a potential homebuyer who’s eager to buy a property, but lacks the necessary credentials. That person may be incentivized to inflate their income and falsify employment records to secure the mortgage. Lying on applications like this is one of the more common types of real estate fraud.
People also commit mortgage fraud on run-down properties through illegal property flipping. Essentially, someone purchases a dilapidated home with the intention of reselling the asset at double, perhaps triple the price. Colluding with an appraiser to artificially inflate the value isn’t out of the question either. Within a month, the entire process can be completed. While the house looks the same, on paper, it’s a gold mine.
3. Foreclosure Scams
Here’s another heartbreaking type of real estate fraud: you’re struggling with your mortgage payments, and a company approaches you with the promise of saving your home for a small fee. In a state of desperation, you agree and sign documents, only to realize later that you were tricked into signing away the title of your home.
The company can then remortgage or sell your house, leaving your entire livelihood hanging by a thread. What happens next? Well, technically the company or individual who now owns your house can evict you, leaving your family homeless and in debt. This kind of situation is extremely grim, but foreclosure scams don’t end softly. Households need to be aware of the grave consequences!
In order to protect your home, it’s imperative for homeowners to directly consult with their mortgage companies or trusted legal professionals during foreclosure proceedings.
4. Rental Scams
Finding an apartment with all the right amenities and for the right price takes a lot of time and research. You could be moving to a new city and you see an affordable unit online that says it’s ready to move in immediately. After a few email exchanges with the ‘landlord’, he wires a deposit. Upon arrival, you realize the apartment isn’t available for rent, and the ‘landlord’ has vanished.
Congratulations, you’ve stumbled across one of the biggest types of real estate fraud: rental scams. Another variant of this scam might involve fraudsters renting out properties they’ve no authority over, leaving unsuspecting tenants in a lurch. In today’s digital age of apartment searching, renters should always schedule property viewings and verify the landlord’s identity before signing anything.
5. Home Improvement Frauds
Whether you’re building a new house or updating your kitchen as a summer project, people hire contractors routinely for home improvement projects. However, that’s not to say every contractor delivers on what they offers nor will they be forthright with the financials. They might complete the job using substandard materials, despite charging for high-quality ones.
You could also pay an exurbanite deposit upfront at the contractor’s urging, and then, they’re suddenly impossible get in contact with. Weeks turn into months, and they’re nowhere to be found. Choosing someone you trust to do the work typically eliminates these types of real estate frauds. Prior research on contractors, cross-referencing reviews, and holding off on full upfront payments will mitigate the risk.
Call To Legal Action
These types of real estate fraud happen to everyday Americans. Continuous self-blame and the feeling of being duped can erode a person’s self-esteem and self-worth, making them question their intelligence and capabilities. When faced with such a situation, seeking legal recourse through a reputable law firm can be invaluable.
In summary, when confronted with these types real estate fraud, a specialized law firm like Deldar Legal offers victims an opportunity to recoup their losses. Our team of experienced attorneys will deploy our expertise and resources toward your case when you call (844)335-3271 or contact us online.
Posted in: Real Estate Fraud