baffled by foreclosure scams...
I am thoroughly baffled as to how these new foreclosure scams work. What money is there to "extract" from a foreclosed home (i.e. the VAST majority of them are under-water)? Are these criminals trying to do some kind of rental scam where they con struggling home-owners into giving them the monthly payments (instead of the bank), and just keep pocketing the change while waiting for the lender to finally foreclose and evict the occupants (i.e. the previous owners)?
It just seems as if these scams only really work if there is equity in the home, but since that so rarely happens, I just can't understand how these creeps make the scams work.
http://online.wsj.com/article/SB120640747530060979.html?mod=googlenews_wsj
It just seems as if these scams only really work if there is equity in the home, but since that so rarely happens, I just can't understand how these creeps make the scams work.
Typically, prosecutors said, the scam worked this way: Sales agents for the ring contacted homeowners through mailings, offering rescue plans to those who appeared on lists used by banks and credit agencies to show owners near foreclosure. When the homeowners sought help, sales agents would steer them into a plan that called for owners to put an "investor" on the home's title.
In exchange, the homeowner would pay rent to the investor, typically a sum smaller than the original mortgage payment. In reality, the investor was usually an associate or family member of the ringleaders or someone recruited via the Internet. The convoluted paperwork often gave the investor the right to replace the homeowner on the title.
Within months, prosecutors said, the ring would take out a new mortgage on the property, to take out the equity. Homeowners either were evicted or ended up in foreclosure when the investor stopped making payments on the new loan.
http://online.wsj.com/article/SB120640747530060979.html?mod=googlenews_wsj
Comments
The scammers collect the rent and do not forward the money on to the lender. A couple of months go by, the home goes into foreclosure and the homeowner is evicted. The scammers scored several thousand dollars and are nowhere to be found.