Scams targeting homeowners becoming common

February 28, 1993|By JAMES M. WOODARD | JAMES M. WOODARD,Copley News Service

This column recently focused on a scam in which a Spanish-speaking family was conned into signing a blank grant deed, subsequently used to transfer ownership to the con artist.

Such scams apparently are becoming ominously commonplace. I received a call from Andrew Koenig, an attorney with a regional legal services association, saying he knows of at least 10 other recent cases where homeowners were hoodwinked into transferring their grant deed to a smooth-talking operator.

"There seems to be a web of people who consistently prey on homeowners," Mr. Koenig said. "As I review records, I keep seeing the names of the same people who are involved in these schemes."

In one case, a 72-year-old woman agreed to give a man a quit-claim deed on her home when she received a $6,000 loan from him. The man then used the deed to obtain an $80,000 mortgage loan from a lender, using the woman's home as security. After receiving the lent funds, the man defaulted on the loan and left the area.

Land fraud cases also are active in today's market, according to Kirk Grossman, an attorney specializing in real estate cases.

"In one case, a group of people invested in a proposed land development project in Hawaii," Mr. Grossman said. "The promoter wined and dined prospective investors, transporting them to and from airports in luxury limousines.

"He knew how to build an illusion of wealth and generate confidence in his stature and capabilities. He knew how to hustle."

The targeted investors were primarily people who had a serious financial need. After hearing the promoter's line, they would borrow from friends and mortgage their home to obtain the needed investment funds.

The pitch was all glitter and allusions -- no substance. The investors lost all or most of their funds.

In another case, a promoter set up a targeted investor with a very small deal, promising to double a $5,000 investment in one RTC month. After 30 days, the investor did indeed receive his $10,000.

A couple of weeks later, the operator presented the investor with a much larger-scale "opportunity." If he would now invest $75,000, he would double that sum in 90 days, he was told. After receiving the invested funds, the promoter disappeared.

"There are good real estate investment opportunities available in the current market, but it's very important for the investor to study and understand all aspects of the deal before signing papers or delivering money," Mr. Grossman said.

*

I recently received a letter from a reader in Philadelphia. The letter reminded me of a problem often cited in other parts of the country. It reads, in part:

"I had an interest lock-in agreement with a mortgage lender at 7.5 percent for a 15-year period with no points. The loan was to refinance my condo residence. I was not informed of any time limitations for our agreement. I paid the mortgage company in advance for a credit check and appraisal.

"The processing took a long time and I was told my lock-in time had expired. I could no longer obtain this interest rate, even though I had paid some of the fees up front.

"It sure doesn't sound legal to me. The agent I worked with is no longer with the company, and I can guess why."

This problem is common. It can be frustrating for a homeowner trying to refinance your home mortgage loan. But there is a way to pull out of it, according to Scott Husted, vice president of mortgage banking for Channel Islands National Bank in California.

Regulation Z of the Consumer Credit Protection Act is one of the strongest of all consumer protection laws, he said. It outlines rigid disclosure and other requirements of lenders. One requirement is that the lender honors the borrower's right to rescind the loan agreements any time within three business days following the signing of loan documents.

In home refinancing cases, if the borrower exercises his right to rescind the new mortgage loan agreement during that three-day period, all monies paid must be returned to the borrower.

(James M. Woodard is a syndicated columnist; write him at Copley News Service, P.O. Box 190, San Diego, CA 92112-0190.)

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