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Mortgage scams shifting, changing faces
SALT LAKE CITY — Officials are warning Utahns to be watchful this year because a number of mortgage scams are surfacing, costing homeowners and lenders thousands of dollars.
The Federal Bureau of Investigation in Salt Lake City and the Utah Division of Real Estate recently issued an alert detailing the top mortgage scams to look out for this year.
The list is released annually to keep Utahns up to date on the most common and newest frauds.
“Fraudsters are modifying their schemes,” said Michelle Pickens, an FBI special agent.
“They’re doing some of the same things, but they’re coming up with different ways to apply them.”
Although homeowners are most often the target, one recent scam highlighted in the report, known as Short Sale Fraud, is also duping banks.
The scam works this way: A bank will strike a deal with a homeowner who is facing foreclosure to sell the home for a lesser amount than is owed. The homeowner then negotiates a different price that allows them to pocket some of the money.
“The homeowner is part of the fraud,” Pickens said. “Say there’s $300,000 owed on a mortgage. The homeowner approaches the bank and says, ‘I can’t pay for the home, but I have someone who will pay $250,000 for it.’ ”
If the bank agrees, Pickens said, the homeowner then sells the home for a price in between the two figures, pocketing the difference without reporting it.
Pickens said authorities are also very concerned about a fast-growing scam aimed at seniors.
Reverse mortgages are legitimate and allow a homeowner to convert home equity into cash. The arrangement is sometimes attractive to seniors, who can use the extra money to supplement income from retirement savings or Social Security.
Con artists persuade seniors they can live in a home for free, while at the same time taking out loans under the occupant’s name and collecting equity on the home. The homeowner is then responsible to repay the mortgage.
The FBI released a similar alert in November that warned homeowners to be wary of companies that promise foreclosure rescue plans at a high cost.
Officials say they received positive feedback from that campaign.
Pickens said, “We received a lot of calls from people asking things like, ‘How do I know if this is legitimate?’”
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