Buying a new home should be an exciting time. And while it can certainly be stressful, the last thing you want to have to worry about is being targeted in real estate scams. Unfortunately, real estate is a common target for criminals due to the large sums of money involved in transactions as well as the sharing of sensitive information among multiple parties. In fact, according to the FBI, more than 13,600 people were victims of real estate or rental fraud in 2020 alone.
As is the case in most things, knowledge is power. Understanding the most common types of real estate scams can help you protect yourself from them so that you can get back to enjoying your new home. This is especially important for first-time homebuyers who are not as experienced with the home buying process and may be more apt to fall victim to real estate scams.
Wire fraud is a scam in which a hacker poses as your real estate agent and convinces you to divert your closing costs to a fraudulent account. Wire fraud relies on a complicated hacking technique called phishing in which a hacker uses fake emails, phone numbers, or websites to impersonate someone you trust.
At Ohio Real Title, we work closely with real estate agents and their clients and utilize new technology to combat wire fraud in real estate. SafeWire™ uses a combination of identity verification and bank authentication technology to help prevent wire fraud and to keep customers’ money safe.
Home Title Theft
Also known as deed theft, home title theft is the process of fraudulently putting a house deed in another person’s name. A thief steals your identity, then uses it to forge a deed, making it look like they’re the property owner. Criminals often target those with significant equity in their homes, oftentimes seniors, or those with second homes who may not be paying as close of attention to the property. If you own a property like this, be hawkish about receiving bills and notices.
A lie that influences a bank’s decision—about whether, for example, to approve a loan, accept a reduced payoff amount, or agree to certain repayment terms—is mortgage fraud. These schemes may be done by industry insiders for profit by misusing the mortgage lending process to steal cash and equity from lenders or homeowners or by buyers to fraudulently acquire or maintain ownership of a home.
In addition, a few other types of real estate scams fall into this category, including:
- Loan Modification – 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.
- Foreclosure Relief – Criminals 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 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.
Protecting against real estate scams and fraud involves safeguarding personal information and being aware of how criminals target homeowners and renters. Real estate fraud is constantly evolving so nothing can prevent it entirely, but using the following best practices can help you avoid common forms of fraud.
Let Ohio Real Title help you find the calm in buying a home. Contact us today to learn more about how we utilize the latest advancements in technology to protect every transaction.