Real Estate Investment Scams that Target Seniors:
What You Need to Know to Identify Them and Avoid Them
Authorities in every state across the United States have been cracking down on real estate investment scams that consider senior citizens to be their primary targets. As effective as these efforts have been, however, it is important to know that you are never invincible or fully protected against a talented real estate investment scam artist.
One of the most common scams encourages seniors to invest their money in high-risk ventures as well as long-term investments which will seldom ever pay off within the lifetime of the seniors. Another type of scam scares seniors into selling their homes in order to avoid facing a fictional tax lien.
It is a heartbreaking fact that seniors are targeted time and time again, and are duped out of their life savings by skilled and unscrupulous con artists.
There are also two specific types of scams that you should become familiar with, as they pass for genuine opportunities among branches of the banking industry across the country. This scam is called “predatory lending”. Though many states are already fighting back against predatory lending, the battle is not over yet. Crooked banks and mortgage lenders have been known to eat up the value of equity in homes and then steal their homes after holding a dirty foreclosure deal. To accomplish this, crooked mortgage brokers or lenders go door-to-door, telling seniors that something is structurally wrong with their homes. They convince these innocent people to sign paperwork that states that money is being borrowed at enormous interest rates and penalties. New loans are then issued, requiring a signature every time. Before they’re done, all of the equity that had been in the home has been eaten away. Foreclosure on such loans can be up to 70%.
In order to avoid this type of scam, make sure that you never sign anything from a solicitor who comes to your door claiming that something is wrong with your home, or that you have to take out a loan. If you want to know whether or not your home is structurally sound, contact a contractor or a real estate agent who can put you in touch with someone who can have a look for you.
A second large home loan scam has to do with a number of mortgage lenders and banks which search their databases for seniors who have already paid off their houses. When they find the individual, they hone in on that person, befriending them and gaining their trust by way of friendly visits and personal chats about their money situation. Typically, on the third visit, the salesperson will offer the homeowners a check to give the seniors greater spending freedom. However, in order to receive this check, they must sign a number of documents. This, in turn, signs the seniors on to an unexpected loan that includes a monthly payment and high interest rates. If the seniors reach the point where they can’t make a payment, the salesperson may make the offer for a “flipped” second loan, which actually carries an even higher interest rate. When the homeowner cannot make the payments on this loan, the lending institution takes the home away.
As you can see, there are a number of extremely complicated and dangerous scams out there. Remember that if something looks too good to be true, it probably is. Whenever you’re uncertain, don’t feel that any decision needs to be made right away. Furthermore, feel welcome to contact a local professional, such as an experienced and qualified realtor, who can advise you with regards to many topics concerning your home and your real estate investment. |