Real estate scammers emailing you

real estate scammers
Business email scams (infographic from fbi.gov)

The warnings of real estate closing scams were rapidly broadcasted in 2015 .  And by 2016, there was awareness that criminals were wholeheartedly targeting all parties involved in real estate transactions through phishing emails.  The phishing emails that were sent seemed legit, and in many cases appeared to have come from your agent or title company, but were actually sent by criminals intent on having you wire money to them.  No one was immune from receiving these emails. Real estate scammers targeted home buyers and sellers, real estate agents, title companies and attorneys.

The FBI (fbi.gov) categorizes this type of crime as Business E-mail Compromise (BEC)/E-mail Account Compromise (EAC).  The scam didn’t begin in 2015, but the FBI began tracking this type of crime in 2013.  But it wasn’t until 2015 that it seemed as if the real estate scammers used BEC/EAC to target the real estate industry, and it spread ike a plague.  And despite efforts by the real estate industry to prevent such crime, BEC/EAC is on the rise.  Real estate scammers have adapted and have become increasingly sophisticated.  Many of the phishing emails (calls) are not distinguishable from the real thing.

Statistics compiled by the FBI Internet Crime Complaint Center (ic3.gov) indicate that there were 78,617 incidents of BEC/EAC worldwide between October 2013 and May 2018.  Over half of these victims (41,058) were in the U.S.  Total global losses during this time period is calculated to be $12,536,948,299 (U.S. losses were $2,935,161,457). 

Unfortunately, the real estate industry has been a target of interest since 2015.  According to FBI statistics, the number of BEC/EAC real estate related victims increased 1100% between 2015 and 2017.  So far, the highest number of BEC/EAC real estate victims were reported in May 2018, while the highest dollar loss from real estate victims was reported in September 2017.  The number of complaints and losses is likely correlated to real estate market activity (notwithstanding efforts to thwart such crimes).

How do criminals know about your real estate transaction?  The internet.  Real estate scammers use information available on real estate portals to identify homes that are pending (under contract) along with agent contact information.  The information is used to infiltrate agents’ emails to compile client names and closing information to target everyone involved in the real estate transaction with phishing emails.  The emails typically request changes in settlement funding.  The changes can request wire in lieu of check, and/or changes in the wire instructions (which would send funds directly to the criminals). 

The FBI has also described BEC/EAC spilling over into phone calls!  In addition to sending spoofed emails, the criminals are also calling you asking for personal information for “verification purposes.”  Experts suggest you be cautious about calls asking for changes in payment types and/or wire instructions.  The fake calls are so real such that victims have reported not being able to tell the difference. Security experts recommended that you create code phrases to verify phone calls with your agent and title company. 

Experts also warn of any communication that is exclusively email and/or asks you to call for verification purposes.  It is likely that any contact information listed in the phishing email is fake.  If the email sender claims to be from the title company or your agent, call them directly to verify the authenticity of the email.  If you receive any email requesting personal information and/or changes in payment/wire instructions, verify the email is legitimate by calling the sender directly (and use your code phrase).

Original article is published at https://dankrell.com/blog/2019/11/19/real-estate-scammers-emailing-you/

By Dan Krell
Copyright© 2019

If you like this post, do not copy; instead please:
link to the article,
like it on facebook
or re-tweet.

Protected by Copyscape Web Plagiarism Detector

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Civil asset forfeiture

civil asset forfeiture
Home Buyer Sanpshot (infographic from nar.realtor)

Can your home be seized through civil asset forfeiture? Consider the ongoing and expanded effort to identify cash purchases of residential real estate to catch criminals.

An imminent Supreme Court decision on Timbs v. Indiana could have implications on your home and property. Although the case is about excessive fines brought on by a state, it highlights the issue of due process in civil asset forfeiture. To bring you up to speed, the case is about the seizure of an Indiana resident’s $42,000 Land Rover by the state of Indiana, although his drug related fine was only $10,000. The Land Rover was allegedly purchased from cash obtained from an insurance policy, instead of illicit monies.

Civil asset forfeit is a when the government (federal, state, or local) confiscates your property when you are suspected of a crime. You don’t necessarily have to be charged or convicted of the crime. Civil libertarians criticize governments and law enforcement agencies for abusing civil asset forfeiture for profit. Maryland is one of the many states that have recently passed legislation reforming civil asset forfeiture. However, Congress has yet to pass a civil asset forfeiture reform bill.

In their effort to fight money laundering and mortgage fraud, the Financial Crimes Enforcement Network (fincen.gov) recently stated that their Geographic Targeting Orders (GTOs) program has “provided valuable data on the purchase of residential real estate by persons implicated, or allegedly involved, in various illicit enterprises including foreign corruption, organized crime, fraud, narcotics trafficking, and other violations. Reissuing the GTOs will further assist in tracking illicit funds and other criminal or illicit activity…”

Previous GTO’s required title companies to report all-cash transactions that met specific criteria. The purpose was to track and identify individuals who mask their identity behind shell companies. FinCen found that the GTO program provided “valuable data on the purchase of residential real estate by persons implicated, or allegedly involved, in various illicit enterprises including foreign corruption, organized crime, fraud, narcotics trafficking, and other violations.” So much so, that A November 15th press release revealed expanded reporting criteria and metro coverage. FinCen believes that the “reissued GTO” will assist in “tracking illicit activity.”

FinCen’s targets were previously limited to suspected foreign entities purchasing luxury properties. However, FinCen is becoming increasingly aggressive to include more transactions and individuals in their reporting criteria.

Two years ago, I reported on the expansion of the FinCen’s interest in fighting mortgage fraud and money laundering through residential real estate transactions. A January 13th 2016 FinCen release stated their intention in expanding their anti-money-laundering efforts to cash purchases of luxury real estate. The GTO was supposed to help learn about the risk posed by “corrupt foreign officials, or transnational criminals” who were suspected of “secretly” buying of luxury real estate in certain metropolitan areas.

Previous GTO’s focused on the cash purchases of luxury homes (over $1 million) in limited metro areas. However, in their November 15th revision, FinCen lowers the reporting threshold of cash purchases to $300,000. Additionally, the metro areas of interest have been expanded to include certain counties Boston, Chicago, Dallas-Fort Worth, Honolulu, Las Vegas. Los Angeles, Miami, New York City, San Antonio, San Diego, San Francisco, and Seattle. Additionally, title companies in those metro areas are also to report “natural persons” behind shell companies used in all-cash purchases of residential real estate, as well as virtual currency purchases.

Original published at https://dankrell.com/blog/2018/12/07/civil-asset-forfeiture/(opens in a new tab)

By Dan Krell.      Copyright © 2018.

If you like this post, do not copy; instead please:
link to the article
like it on facebook
or re-tweet.

Protected by Copyscape Web Plagiarism Detector
Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Real estate tin men

real estate tin men
Beware the real estate tin men (infographic from keepingcurrentmatters.com)

Beware the Real Estate Tin Men!  “Tin men” was a term used to describe con-artists after the 1987 Barrie Levinson movie by the same name became a nationwide hit.  The movie was about aluminum siding salesmen who did whatever they could to sell home improvements in 1963 Baltimore.  The story revealed how everyday “schnooks” created the façade of a successful sales person, as well as revealing their unscrupulous sales tactics.  The main characters are flawed and likable, so much so that you’re rooting for them as they are cross-examined at their MHIC license hearing.

Modern versions of tin men still exist.  They exist in all professions.  They are constantly refining their tactics to get your business. They will often tell you what you want to hear.

When it comes to buying and selling a home, beware of the real estate tin men!  These are agents who will say and do almost anything for your business.

Many real estate agents still use tin men tactics.  Real estate sales is difficult and many agents will do whatever they can to get a leg up on their competition and a chance at a sales commission.  There is a subculture in the industry that is focused on pushing the ethical envelope to make money.  This philosophy is spread by “gurus” and coaches who teach sales tactics, persuasion, and income strategies.

Unlike the world of 1963, when a salesman could easily lie to make the sale, today’s easy flow of information makes it unlikely that a real estate agent would flat-out lie.  The internet has created a savvy and knowledgeable consumer by allowing easy authentication of information.  However, the internet has not changed the real estate agent’s reputation for bending the truth, otherwise known as “puffery.”

Rapport is often built on appearances.  Like the 1960’s tin men, many real estate agents also employ smoke and mirrors to help them appear successful.  Although some still drive cars and dress beyond their means to “fake it,” many agents rely on technology for their trickery.  The art of deception is widely used by agents who dare to manipulate data.  Many real estate agents, who supervise other agents, take credit for MLS sales they had nothing to do with so as to appear they have many more sales (than they actually do).  Likewise, many agents pay for fake internet reviews.  Although many platforms screen for false reviews, agents continue to find ways to get fake 5-star reviews on websites, including incentivizing unsolicited otherwise 5-star reviews from clients.

Many real estate agents rely on gimmicks as a means of getting business.  A popular agent promotion is “I will buy your home if it doesn’t sell.”  The reality is that although the agent may offer to buy your home if they can’t sell it, the conditions actually don’t make it a viable option.  Another oversold gimmick is “cutting-edge” marketing.  The promise of cutting-edge marketing used to mean advanced and new.  However, today cutting-edge real estate marketing is overshadowed by the truth that homes are primarily viewed on real estate internet portals, such as Zillow (all MLS listings are posted to these portals).

Most Realtors are ethical and do the right thing.  A recent article by Jim Dalrymple II even touts broker (and agent) humility as the “new method” and business model (Humility, not arrogance, is the new real estate leadership trend; inman.com; October 17, 2017).  And although real estate agents have increasingly been leaning towards transparency and authenticity, you should still beware of tin men.

Original located at https://dankrell.com/blog/2018/10/25/real-estate-tin-men/

By Dan Krell.          Copyright © 2018.

If you like this post, do not copy; instead please:
link to the article,
like it on facebook
or re-tweet.

Protected by Copyscape Web Plagiarism Detector
Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Title fraud protection

title fraud
Title fraud and house stealing (infographic from fbi.gov)

In the wake of the largest consumer data breach in history, ads for credit monitoring and other related services are flooding the airwaves.  One of these associated services is home title monitoring.  These commercials claim that they will protect you from home stealing and title fraud.  But what is home title monitoring and is it worthwhile?

According to a FBI report (fbi.gov) “House Stealing, the Latest Scam on the Block,” house stealing is a combination of two popular “rackets:” identity theft and mortgage fraud.  The 2008 report described a couple of versions of how the scam is perpetrated.  One form of this crime is committed by obtaining a cash-out mortgage posing as you to get a check at settlement.  Another form is committed by fraudulently taking title to your home and then selling the home for the proceeds.  Although fraudsters frequently target vacant homes, house stealing can also occur while you’re still occupying your home.  The FBI describes how scammers perpetrate house stealing and title fraud:

Here’s how it generally works:
-The con artists start by picking out a house to steal—say, YOURS.
-Next, they assume your identity—getting a hold of your name and personal information (easy enough to do off the Internet) and using that to create fake IDs, social security cards, etc.
-Then, they go to an office supply store and purchase forms that transfer property.
-After forging your signature and using the fake IDs, they file these deeds with the proper authorities, and lo and behold, your house is now THEIRS* [*Since the paperwork is fraudulent, the house doesn’t legally belong to the con artists.]
There are some variations on this theme…
-Con artists look for a vacant house—say, a vacation home or rental property—and do a little research to find out who owns it. Then, they steal the owner’s identity, go through the same process of transferring the deed, put the empty house on the market, and pocket the profits.
-Or, the fraudsters steal a house a family is still living in…find a buyer (someone, say, who is satisfied with a few online photos)…and sell the house without the family even knowing. In fact, the rightful owners continue right on paying the mortgage for a house they no longer own.

Both forms of house stealing (or title fraud) are typically intertwined with mortgage fraud.  And because of the process, mortgage fraud usually has multiple conspirators carrying out the scam.  An example of this is the 2013-2014 sentencing of at least five co-conspirators (including a title company manager and mortgage broker).  These criminals perpetrated a complex multi-million-dollar mortgage fraud scheme that occurred in Maryland.  One conspirator sold homes that did not belong to her.

According to the FBI report, house stealing is difficult to prevent.  However, vigilance on your part is highly recommended.  Red flags include receiving payment books and/or late notices for loans for which you did not apply.  Additionally, it is recommended to routinely monitor your home’s title in the county’s land records. Any unrecognized paperwork or fraudulent looking signatures may be an indication of title fraud and should be looked into.  Title fraud should be reported to the FBI.

Title fraud protection

You can visit Montgomery County’s land records office and get information on searching your home’s title from the very helpful staff.  You can also search land records online.  However, you should consult a title attorney for a detailed title search.

A problem with searching land records is that it is not always definitive.  Of course, accuracy depends on those who prepare and file the documents with the county.  Common issues that are found in title searches are misspelled names and aliases.  Deeds and other related documents (such as quit claim deeds and mortgage satisfaction letters) are not always filed timely, or sometimes not at all.

After the Equifax breach, millions of consumers’ identifications are available to criminals to perpetrate house stealing/title fraud.  Title monitoring services tout their ability to protect you from such scams.  Before you decide to enroll, be aware of the fees, the limitations, and how it compares or differs from your owner’s title insurance policy (including cost).

Your title insurance policy may already protect you from title fraud.  According to the Maryland Insurance Administration’s A Consumer Guide to Title Insurance (insurance.maryland.gov), “Title insurance protects real estate purchasers and/or lenders from losses that arise after a real estate settlement…A title insurance policy provides coverage for legal defense, as well as the coverage amount listed in the policy, which usually equals the purchase price of the real property.”  Basic coverage typically protects you for fraud that occurred prior to settlement.  However, enhanced coverage may provide protection for fraud that occurs after settlement.

You should consult with a title attorney about your title insurance coverage and how it protects you from title fraud.

By DanKrell
Copyright© 2017

Original published at https://dankrell.com/blog/2017/10/22/title-fraud-protection

If you like this post, do not copy; instead please:
link to the article,
like it at facebook
or re-tweet.

Protected by Copyscape Web Plagiarism Detector


Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Mortgage fraud is not victimless

Mortgage fraud (infographic from corelogic.com)

Since the foreclosure crisis, there have been many enhancements to the mortgage process to deter fraud.  Some of these changes include licensing of loan officers and indicating the license on government loans, choosing appraisers randomly, and limiting who can speak with appraisers.  Fraud detection before and after settlement has also been improved to thwart criminals.  But even with modern advancements, mortgage fraud has been trending upward.

Mortgage fraud schemes are increasingly sophisticated.  You may think that that those who are involved in mortgage fraud are career criminals operating in remote areas.  However, anyone can knowingly or unknowingly be involved, including real estate agents, attorneys, loan officers, appraisers, etc.  And it can happen anywhere, even in your neighborhood.  Where are is the most fraud trending? CoreLogic (corelogic.com) tracks fraud risk, and an interactive map can be found here.

Innocent consumers can get caught up in a mortgage fraud scheme too.  Historically, home flipping schemes were the traps where unwitting home buyers would get cheated.  However, since the foreclosure crises, distressed home owners have been a major target of mortgage modification scams.

The Federal Bureau of Investigation (fbi.gov) maintains that mortgage fraud is typically a material misstatement, misrepresentation, or omission in relation to getting a loan.  It is also considered fraud to lie to influence a bank’s decision to approve a loan and/or to get favorable loan terms.  The information you provide for your mortgage application should truthful.  Even indicating falsely that you will be occupying the property after settlement to get a better interest rate, when your intention is to use it as a rental property, is mortgage fraud.

After the mortgage crisis, the FBI (and other law enforcement agencies) broadened the scope of mortgage fraud to include frauds targeting distressed home owners.

A recent conviction of local fraudsters detailed such a scheme.  The co-conspirators claimed that they could help home owners modify mortgages and prevent foreclosure.  Evidence presented during their trial showed that the scammers charged their victims upfront and monthly fees that were to be used to pay down mortgages as part of a “principal reduction” plan.  Even though the victims received monthly invoices from the scammers showing their mortgage balances being paid down, there were no negotiations with lenders.  Many victims lost their homes.  The defendants will be sentenced later this year.

One of the most common tactics in mortgage fraud schemes is the use of a “straw buyer.”  A straw buyer is often used by con artists as part of their mortgage fraud scheme to make the transaction appear legitimate.  Although a straw buyer often knowingly consents to the use of their information to go along with the scheme, they are also sometimes the victim.  A Baltimore real estate agent was sentenced earlier this year to twenty-seven months in prison, ordered to pay $735,363.47 restitution, as well as forfeit $962,274.95 for his part of a mortgage fraud scheme.  The scheme used naïve and financially limited straw buyers to purchase renovated distressed properties at inflated prices, which the scammers profited.  To facilitate the loan process, the conspirators gave false information to loan officers including the intent of buyers to use the property as their primary residence.

Mortgage fraud is not a victimless crime.  Besides defrauding banks and their shareholders, mortgage fraud affects the neighborhood and community.  Unwitting consumers who have been caught in scams are usually left holding the bag and are foreclosed.  Residents of neighborhoods where mortgage fraud has occurred are affected by decreased home values and other effects of vacant and foreclosed homes.

Common mortgage fraud schemes listed by the FBI:

Foreclosure rescue schemes: The perpetrators identify homeowners who are in foreclosure or at risk of defaulting on their mortgage loan and then mislead them into believing they can save their homes by transferring the deed or putting the property in the name of an investor. The perpetrators profit by selling the property to an investor or straw borrower, creating equity using a fraudulent appraisal, and stealing the seller proceeds or fees paid by the homeowners. The homeowners are sometimes told they can pay rent for at least a year and repurchase the property once their credit has been reestablished. However, the perpetrators fail to make the mortgage payments and usually the property goes into foreclosure.

Loan modification schemes: Similar to foreclosure rescue scams, these schemes involve perpetrators purporting to assist homeowners who are delinquent in their mortgage payments and are on the verge of losing their home by offering to renegotiate the terms of the homeowners’ loan with the lender. The scammers, however, demand large fees up front and often negotiate unfavorable terms for the clients, or do not negotiate at all. Usually, the homeowners ultimately lose their homes.

Illegal property flipping: Property is purchased, falsely appraised at a higher value, and then quickly sold. What makes property flipping illegal is the fraudulent appraisal information or false information provided during the transactions. The schemes typically involve one or more of the following: fraudulent appraisals; falsified loan documentation; inflated buyer income; or kickbacks to buyers, investors, property/loan brokers, appraisers, and title company employees.

Builder bailout/condo conversion: Builders facing rising inventory and declining demand for newly constructed homes employ bailout schemes to offset losses. Builders find buyers who obtain loans for the properties but who then allow the properties to go into foreclosure. In a condo conversion scheme, apartment complexes purchased by developers during a housing boom are converted into condos, and in a declining real estate market, developers often have excess inventory of units. So developers recruit straw buyers with cash-back incentives and inflate the value of the condos to obtain a larger sales price at closing. In addition to failing to disclose the cash-back incentives to the lender, the straw buyers’ income and asset information are often inflated in order for them to qualify for properties that they otherwise would be ineligible or unqualified to purchase.

Equity skimming: An investor may use a straw buyer, false income documents, and false credit reports to obtain a mortgage loan in the straw buyer’s name. Subsequent to closing, the straw buyer signs the property over to the investor in a quit claim deed, which relinquishes all rights to the property and provides no guaranty to title. The investor does not make any mortgage payments and rents the property until foreclosure takes place several months later.

Silent second: The buyer of a property borrows the down payment from the seller through the issuance of a non-disclosed second mortgage. The primary lender believes the borrower has invested his own money in the down payment, when in fact, it is borrowed. The second mortgage may not be recorded to further conceal its status from the primary lender.

Home equity conversion mortgage (HECM): A HECM is a reverse mortgage loan product insured by the Federal Housing Administration to borrowers who are 62 years or older, own their own property (or have a small mortgage balance), occupy the property as their primary residence, and participate in HECM counseling. It provides homeowners access to equity in their homes, usually in a lump sum payment. Perpetrators taking advantage of the HECM program recruit seniors through local churches, investment seminars, and television, radio, billboard, and mailer advertisements. The scammers then obtain a HECM in the name of the recruited homeowner to convert equity in the homes into cash. The scammers keep the cash and pay a fee to the senior citizen or take the full amount unbeknownst to the senior citizen. No loan payment or repayment is required until the borrower no longer uses the house as a primary residence. In the scheme, the appraisals on the home are vastly inflated and the lender does not detect the fraud until the homeowner dies and the true value of the property is discovered.

Commercial real estate loans: Owners of distressed commercial real estate (or those acting on their behalf) obtain financing by manipulating the property’s appraised value. Bogus leases may be created to exaggerate the building’s profitability, thus inflating the value as determined using the ‘income method’ for property valuation. Fraudulent appraisals trick lenders into extending loans to the owner. As cash flows are lower than stated, the borrower struggles to maintain the property and repairs are neglected. By the time the commercial loans are in default, the lender is often left with dilapidated or difficult-to-rent commercial property. Many of the methods of committing mortgage fraud that are found in residential real estate are also present in commercial loan fraud.

Air loans: This is a nonexistent property loan where there is usually no collateral. Air loans involve brokers who invent borrowers and properties, establish accounts for payments, and maintain custodial accounts for escrows. They may establish an office with a bank of telephones, each one used as the fake employer, appraiser, credit agency, etc., to fraudulently deceive creditors who attempt to verify information on loan applications.

Original published at https://dankrell.com

Copyright© Dan Krell
Google+

If you like this post, do not copy; instead please:
link to the article,
like it at facebook
or re-tweet.


Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.