Chapter 9
Steering Clear of Quick-Fix
Understanding Why Your Vulnerability Makes You Easy Prey
Have you ever seen the wild dogs of Africa in action? The way they hunt is very similar to the way foreclosure con artists operate. When a pack of wild dogs spots a herd of wildebeests, they don’t try to catch the herd by surprise.
Instead, they fan out and make their presence known, so the herd panics and starts running. At first, this may seem a bit strange. After all, why would the wild dogs want to give the wildebeests advance warning?
Unlike lions or leopards, the wild dogs of Africa can’t make the kill on their own, and they certainly can’t go head to head with a healthy adult wilde- beest. To level the playing field, they get the herd moving and then use their keen vision and discriminating taste to pick out the ones that don’t keep up for one reason or another. Maybe a particular wildebeest is old, ill, or crip- pled. Whatever it is, the wildebeest stands out from the rest of the herd as being more vulnerable. The wild dogs then focus in on that one animal, try to cut it off from the rest of the herd, isolate it, wear it down, and kill it.
Real estate con artists do the same thing. They often hunt in packs of two to five people to make themselves appear more credible. They have a keen, yet twisted, ability to pick out the vulnerable homeowner, and then they work toward isolating that homeowner, wearing him down, and stealing everything of any value.
By knowing what the con artists are looking for, you can employ some evasive maneuvers to make yourself a less attractive target:
Desperation: Anyone who has no money, has fallen behind on her bills, and owes everyone with no end in sight is an attractive mark. Desperate for a way out, these people often make quick, impulsive decisions, which play right into the hands of the con artists.
Pride: An overwhelming desire to solve the problem before your spouse, other family members, or friends hear about it often works in favor of the con artists. This is how they manage to separate distressed home- owners from the herd. They want to be the only ones who feed you information, false information that other people may encourage you to question. Con artists often tell homeowners, “We can solve this problem, and your friends and family, wife, or husband won’t even have to know.
You can fix this before anyone finds out.”
Trust:Being a trusting person is generally a good thing, but not when you’re approached by a foreclosure con artist. They know that people generally trust what others tell them. Be skeptical. Don’t believe any- thing anybody tells you until you have at least one other independent source of information that verifies it. Con artists often single out the more trusting member of the household and use that person to convince everyone else to go along with the deal.
Con artists often use religion as a diabolical tool — they pray with you, so they can prey upon you. They may present themselves as guardian angels sent from heaven, but by the time they get done with you, you’re going to feel as though you’ve been dragged through hell and back. Don’t fall for slick words, false compassion, and feel-good solutions. Carefully scrutinize anyonewho isn’t willing to answer your questions or who operates out of his car and has no business card, phone, or office.
Avoiding the Empty Promises of Quit Claim Deeds
How would you like to simply make all your problems go away? Someone shows up at your door, offering you this option: “Sign this deed, and I will take care of everything for you.” You sign the deed, and for a couple months, at least, it seems as though all your problems have disappeared — you haven’t received a letter or a phone call from the bank in several weeks. All is well.
A few months down the road, however, you receive a foreclosure notice from another bank that you’d never heard of. You call the bank to find out that you took out another mortgage on the house! Furthermore, you happen to owe much more on the new mortgage than what you owed on your previous mort- gage. What happened? You’ve just been taken to the cleaners by a foreclosure con artist.
This is only one of several ways you can be duped out of your home. In the following sections, we reveal the two most common ways con artists use quit claim deeds to steal homes, so you can defend yourself against these scams.
A quit-claim deed is the easiest deed for con artists to use to steal your home, but it’s not the only type of deed that can pose a problem. They can also use a warranty or a bargain and sale deed. Before signing any deed, consult your attorney and have her explain the ramifications of signing.
Using sleight of hand with the bait and switch
The bait and switch is as old a tactic as the “profession” of con artistry. In the foreclosure arena, con artists use it, along with the quit claim deed, to fool distressed homeowners into giving away the rights to their homes.
Here’s how it works: The con artist shows up and tells you that he knows pri- vate investors with a lot of moolah and big hearts for people in foreclosure.
The investors want to loan money to help people save their homes and at the same time earn some interest. (The “investors” are usually the ringleaders.
The con artists selling the bill of goods to the homeowner are the bird dogs who are out trying to identify vulnerable homeowners.) The con artist inter- views you and informs you that you’re a perfect candidate for the investor’s National Foreclosure Rescue Program. Lucky you!
Over the next day or so, the con artist explains how the program works and sets you up with a new mortgage that refinances you out of all your problems.
The program that was explained to you is clear and it is, indeed (pardon the pun), exactly what you need to correct the situation.
The bait and switch happens when you go to sign the documents. The con artist shows up with a stack of 15 to 20 official documents representing the new mortgage. In some cases, the con artist explains each document in great detail, so you feel comfortable signing them. The con artist then informs you that she needs to have a second, and perhaps a third, identical set of docu- ments signed as well — one for her files and one for each investor, or what- ever the story happens to be. The papers are exactly the same as the stack you just signed, but in the middle of the second or third stack is one extra document — a deed to your home. Because the documents are complex, you don’t pay much attention to what each page looks like, and eventually they all look the same. You sign all the documents, signing over your legal rights to the home to the con artist.
The con artist then tells you that she’ll send you a full copy of the documents after they’re recorded, or she’ll drop them off to you. You thank her and she leaves. You sleep peacefully, believing everything has been taken care of.
Now that the con artist has the deed to your home, she can record it at the county register of deeds to make the transfer of property official. After the deed has been recorded, the con artist is ready to cash out in one of three ways:
Refinancing:The con artist refinances for as close to the full value of the property as possible, pays off the existing mortgage, and pockets the remaining cash (the equity that you had in the property).
Taking out a second mortgage:The con artist takes out a second mort- gage, cashing out as much of the equity as possible. This can cause some serious hassles. You’ll have to cancel the deed, recover the prop- erty, and explain to the bank why you’re not responsible for paying off that second mortgage. You may even end up with two mortgages to pay.
Selling the property:The con artist places the home on the market and explains to anyone who’s interested in the property that you’re a tenant, or she makes up some other story. She sells the property and pockets the proceeds. A complete stranger shows up at your door, explaining that he just bought this house and is ready to move in. Little does he know that both you and he are the victims of a clever scam.
A deed is a legal document, and after it’s recorded, it’s highly enforceable.
Going before a judge and claiming that you didn’t realize what you were sign- ing is rarely sufficient in proving that you are the rightful owner. Whenever you sign documents, you should read everything you sign,and insist on receiv- ing identical copies of the originals immediately. Never leave empty-handed.
Stealing equity with the alternative financing scam
Alternative financing is a perfectly legitimate way to save your property, assuming you’re dealing with a trustworthy investor. Using a deed, you sign over your rights to the property to the investor, who pays off the mortgage or redeems the sheriff’s deed for you. You make regular monthly payments (sort of like rent) to the investor for 3 to 24 months, building your credit rating. After you’ve repaired your credit, you can then qualify for a mortgage to pay off the investor, who then signs the rights to the property back over to you — problem solved and you’re back on your feet. All is well.
Foreclosure con artists often use this same technique with any of several variations to steal homes:
The con artist fails to redeem the property as promised, simply col- lecting your monthly payments.At the end of the redemption period, the bailiff evicts you.
The con artist fails to pay off the original mortgage as promised.Same result — after the sale or when the redemption period expires, the bailiff evicts you.
At the end of the 3 to 24 months, the con artist refuses to deed the property back to you, claiming that you failed to honor the terms of your contract and forfeited your rights to the property.