While late-night TV scams and robocall schemes are coming under increased scrutiny by state and federal officials, new real estate-related swindles continue to come to light.
The latest is what title company executive Thomas Cronkright calls the “owner-not-present” ruse in which fraudsters claim to be the owners of vacant lots and unencumbered properties to shoot for a quick sale by offering below-market prices.
Cronkright, who also owns CertifID, a company which works to uncover and prevent wire fraud, says the crime has “grown quickly” into the second-largest risk category of real estate fraud.
The scam first hit his radar last summer when a ring out of Germany was discovered to be focused on non-owner-occupied houses. But “now we’ve seen enough of it to realize there is a definite trend growing around vacant and unimproved property without mortgages.”
Here’s how the scam works.
The swindler searches public records to find real estate that is free of mortgages or other liens – often vacant lots or rental properties – and identifies the true owner. Then he poses as the owner and contacts a real estate agent to list the property for sale.
That’s exactly what happened to a lot owner in Nantucket, who found out his land was being targeted when someone who had seen the listing on Zillow called to see if he would take a lower price. He immediately ordered Zillow to remove the listing, and no harm was done.
But he’s lucky. Most owners don’t find out they’ve been had until they discover their taxes haven’t been paid.
How Latest Scam Works
According to Cronkright, all communications are done digitally, either through email, messaging or other means – but never in person. The listing price is generally below market to stir immediate interest. The scammer prefers an all-cash transaction, and when an offer is made, it is quickly accepted.
The scammer refuses to sign documents in person, though. Instead, he asks for a remote notary signing. But when the papers arrive, he impersonates the notary and returns falsified documents to the title company or closing attorney. And at settlement, the proceeds are transferred to the sharpie.
Typically, says Cronkright, the fraud isn’t discovered until a point at which the documents are recorded with the applicable county, which can take days or even weeks in some jurisdictions.
“The detection level is almost nil,” he told me. “And it can be an absolute mess if it reaches the courts.”
CertifID has worked with federal authorities on several of these kinds of cases. In North Carolina, a title agency and real estate agent were scammed out of $33,000 on an empty lot transaction. But CertifID worked with the Secret Service to freeze and ultimately gain the fund’s return. In two other cases, one in Ohio and the other in Florida, the supposed owners contacted real estate agents online, out of the blue, with no previous connection.
Home Title Lock Investigated
Meanwhile, Texas Attorney General Ken Paxton is investigating Home Title Lock for possible violations of the state’s Deceptive Trade Practices Act by allegedly misleading consumers with deceiving statements concerning the prevalence of the theft of real estate titles and the need for the company’s services.
Paxton is trying to determine if Home Title Lock’s claims and advertisements are false, misleading or deceptive. Toward that end, the California-based company has been required to turn over documents concerning its advertisements and all documents substantiating specific claims.
“I won’t tolerate false, misleading, or deceptive advertisements targeted to any Texas consumers,” the AG said in a statement. “If Home Title Lock is misrepresenting its services or the need for its services, I will put a stop to its unlawful behavior.”
Last summer, this column warned consumers about Home Title Lock’s claims that the FBI says title theft was “one of the fastest-growing” crimes in America. The FBI said it has no record of making such an assertion. And the document the company sent to ABC News to justify its claim was more than 20 years old and was about mortgage fraud, not title theft.
For about $20 a month, the company says it will monitor a subscriber’s title and notify him right away if it is tampered with. But homeowners seemed to be left to themselves if Title Lock found something amiss.
Moreover, monitoring your title is something consumers can do for themselves. And in many places, the county recorder’s office will do it for you at no charge.
FCC Acts on 40-Year Contracts
At the same time, the Federal Communications Commission has taken steps to squelch the ability of MV Realty to run a robocall campaign aimed at pushing unsuspecting homeowners into signing 40-year leasing contracts. I covered this outfit in October.
Acting after attorneys general in three states – Florida, Massachusetts and Pennsylvania – have filed suits against MV for using misleading robocalls to “swindle” and “scam” owners into effectively mortgaging their homes in exchange for cash payments, the FCC has told telecommunications companies not to carry the suspected illegal pitches. MV Realty told me that it “only engages” with people who respond to its advertisements.
“Mortgage scams are some of the most pernicious types of robocalls we see,” said FCC Chairwoman Jessica Rosenworcel. “Sending these junk calls to financially stressed homeowners just to offer them deceptive products and services is unconscionable. That’s why we are shutting down these calls right now.”
The FCC received some 1,500 unwanted call complaints from consumers related to mortgages last year.
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at email@example.com.