Mon, Sep 08, 2008
|
TCI Shopping
|
|
Featured TCI Properties |
|
Class A Office Space
Traverse City, MI
|
| Price: $999,000 | |
|
|
Don't Fall For Real Estate Investing Scams
| | Friday, September 10, 2004 @ 08:00 AM EDT
|  Printer Friendly Page
 Send this Story to a Friend |
Contributed by: John Michael
John Michael Properties
Read more archived articles about Buying
This fraudulent scam is illegal and typically involves a secret agreement between a lender, an appraiser and a "straw buyer."
Here's how it works:
(1) The scam artist would have a fraudulent, significantly inflated appraisal made of a residential home that was for sale.
(2) The scam artist would then target an unknowing potential "straw buyer," whom they believed to have a good credit record, to purchase the homes as investment properties. The scam artist would tell the straw buyer that the scam artist would place renters in the home, collect rent, and forward the rental income to the straw buyer, sell for profit or owner finance or the like of.
(3) The scam artist would collect personal information from the straw buyer such as bank account numbers and employment information to prepare a mortgage application on the straw buyer's behalf.
(4) When preparing the mortgage application, the scam artist would create false documentation about the straw buyer, inflating his income to ensure that
he qualified for a loan for the inflated amount in the fraudulent appraisal. This false documentation most of the time includes forged W-2s, income tax returns and verification of employment forms. This false documentation is submitted by the scam artist, along with the mortgage applications, to financial institutions. The straw buyer would be approved for a mortgage based on the false documentation.
(5) The scam artist would buy the home at the normal market price through a corporation or other business entity, which had been created by the scam artist or his associates.
(6) Often, on the same day as the above purchase, the scam artist would sell the home to the straw buyer at the price contained in the inflated appraisal, realizing a profit.
(7) The business would forward checks to the straw buyer for a few months, claiming that the checks were rental, lease or finance income from the home. They have even been known to send tickle money just to put you in a comfort zone before they bail.
(8) Eventually, they will stop forwarding checks to the straw buyer, who would then default on the mortgage or worse yet they claim to be making the payments and never do. The lending institution would then foreclose, and discover that the property was worth significantly less than the amount of the loan it had made based on the fraudulent appraisal.
Now this is where the hammer falls on you as the "straw buyer"!
You will face credit issues
Possible Attorney General involvement
Possible County grand jury involvement
You could be charged with theft
You could be charged with racketeering
You could be charged with credit fraud
You could be charged with tax fraud
You could face fines
You could face jail time
This is also called "MORTGAGE FLIPPING" and it's a death sentence to an investor who gets cough.
Most everyone has heard it before — if a deal sounds too good to be true, it probably is
A number of red flags wave in the ill wind of mortgage fraud includes:
• You are offered a fee to use your name and credit information to obtain a mortgage.
• You are encouraged to include false information on a loan application.
• You are asked to leave signature lines or other important areas of a loan application blank.
• The amount of the mortgage is higher than the value of the property.
• The mortgage has gone through a series of refinancing and in each instance the amount of the mortgage has increased.
Not knowing the information would be used to commit mortgage fraud will not necessarily get a straw buyer off the hook with the law.
“Ignorance of the law is no excuse”
“There could be consequences even if (the straw buyer) is unaware of the deal.”
Note: John Michael is the author of many guides that can help you become more successful as an investor. See http://www.thecreativeinvestor.com/ChanPart-JohnMichael.html
Word Cloud:
/>
you collect application finance information credit other price charged appraisal. they employment income have documentation business buyer investing sell loan buyer, face scams involvement amount fall straw false inflated estate />
possible home significantly would through even then time fraud real good before will mortgage than based forward made with this "straw been scam artist fraudulent checks don't could
|
|
| |
Average Score: 5
Votes: 6
|
|
| "" | Login/Create an Account | 1 Comment |
|
| These comments are owned by the posters. We aren't responsible for their content nor endorse them.TCI Comment section - where you are the moderator!If you see an offensive post or advertisement, please use the "As Is" drop down menu to choose a topic rank, then click Moderate at the bottom. This in turn will allow registered users to view only the topics that are most relevant to the article and get rid of the advertisement spam and junk. |
|
|
