BluefoxToday blog : Mortgage and real estate scams alive and well

Now that the mortgage and housing markets are together going through tough times scam artists have come out to sniff for opportunity under just about every rock. They are shamelessly preying on the unaware. The numbers alone tell the story, as FBI's Financial Crimes Enforcement Network, or FinCEN, registered almost 15,000 SARs, or suspicious activity reports, in the first fiscal quarter of 2008 and plans on getting over 60,000 of them for the entire year. Fiscal 2007 had 46,700 and 2006 35,600. That makes for quite an upward curve for the last three years.

And those figures are only part of the story. Banks under federal scrutiny are the only ones required to record SARs while those home loan lenders who fall outside the reporting regimen make up a good majority of the total loan activity. The problem, therefore, is much larger than what these FBI statistics reveal and the current regulatory structure appears to be unable to stop it.

One of the all-time favorite scams is the one where the villain approaches a homeowner under threat of a foreclosure, sweet-talks him into deeding the home over to the villain with the promise that he'll get it back when his finances are again in order. In the meantime the homeowner is asked to make his mortgage payments to the scammer who swears he'll forward them to the lender. Well, of course, he never does. He pockets all the moneys and let's the house eventually slide into foreclosure.  

But that's not all. Some of today's villains have pioneered an extra twist to this one. They are now selling the property to an anxious buyer, understandably hungry for a foreclosure deal, who is using a different mortgage lender. This way the scammer is making money on two fronts, collecting mortgage payments for a few months and also pocketing the profit from the sale of the hustled house when it closes.

Where does it hurt? Actually everywhere. Homeowners, lenders, investors, they all pay for this at some point.