Stressed buyers and renters desperate for a home can make rash decisions – and scammers know that. Escrow wire-fraud scams can destroy a buyer’s dreams only moments before a closing, but Fla. A.G. Moody also focuses on rental, loan-flipping and foreclosure relief scams.
TALLAHASSEE, Fla. – Florida is in the midst of a home buying frenzy, and Florida Attorney General Ashley Moody issued a warning for Floridians to remain vigilant against real estate scams. Stressed buyers or renters can be fertile territory for scammers because offers that seem “too good to be true” aren’t. Consumers should understand how to safely navigate the process.
“Buying a home is often the largest and most important purchase a person makes, so it’s important to ensure scammers don’t take advantage of the situation to turn a dream purchase into a financial nightmare,” says Moody.
Common real estate scams include escrow wire fraud, rental scams, loan-flipping scams and foreclosure relief scams.
Escrow wire fraud
In escrow wire fraud, scammers usually pose as representatives from a title or escrow company and contact a new homebuyer with instructions for escrow money transfer. If the consumer follows the scammer’s instructions and wires in the escrow money, the scammers can withdraw that money and disappear.
To avoid this trap, consumers should always check the original documents received from the lender directly rather than relying on just an email, and they should call the phone numbers listed on the original document to confirm the validity of the wiring instructions. A big red flag: Sometimes an email requests an escrow change that contradicts instructions already received. Always confirm an escrow account number with the bank or lender before wiring any money.
Scammers post fake rental ads on Craigslist or other sites, often using real photos and/or addresses taken from a legitimate real estate listing or rental offer. They change only the contact information.
Once a consumer expresses interest in the rental, the scammers ask for either an upfront cash payment to rent the property or put down a deposit. Consumers should be suspicious of anyone who asks for a cash deposit to see a property, and ensure the person is the real property owner before negotiating rental terms. A big red flag: Scammers will often say they’re out of town and suggest that renters drive by to look at the property. They often “scrape” information from an actual listing because the home will then have a “for rent” or “for sale” sign in the yard.
Loan-flipping scams occur when a predatory lender persuades a homeowner to refinance their mortgage repeatedly, often borrowing more money each time. The fraudster charges high fees with each transaction, and eventually the homeowner gets stuck with higher loan payments they can’t afford. Homeowners can avoid this scam by being wary of lender solicitations, and to deal only directly with known banks or lenders.
Foreclosure relief scams
In a foreclosure relief scam, criminals dupe homeowners in pre-foreclosure with a promise to save the owner’s home – providing the owner pays a large upfront fee. As time passes, these homeowners often find themselves in worse financial shape and living in a house that the bank has still foreclosed. Consumers should work directly with their loan servicer to modify an existing loan, request forbearance or make another arrangement.
In an earlier Consumer Alert, Moody warned Florida consumers about moving scams, which often involve lower-priced services that become more expensive after the fact. To avoid common moving scams, consumers should:
- Never sign blank or incomplete documents or contracts
- Obtain moving estimates and quotes from the company in writing and make sure estimates are binding
- Determine whether the movers will perform the move alone or if the company will subcontract the service to another carrier
Real estate and moving scams in Florida can be reported to the Attorney General’s office by calling 1(866) 9NO-SCAM or filing a complaint online at MyFloridaLegal.com.
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