Common Mortgage Scams Target Seniors


On Thursday, February 14, 2008, correspondent Sarah Krouse reported in the Atlanta Journal-Constitution on testimony given before the Senate Special Committee on Aging regarding mortgage scams that are targeting seniors.

According to Krouse, three of the common types of fraud are:

Title Transfer
? A scammer convinces a homeowner to sign a fraudulent document that serves to sign the house over to the scammer;

Home Sale ? A foreclosure “rescue” company buys the house with the promise that the senior can remain as a renter and repurchase the house in a few years. Needless to say, these promises are unenforceable; and

Mortgage Negotiation
? A fake rescue firm tells the homeowner that it will negotiate an extended and/or lower payment of the mortgage. The senior makes the mortgage payments to the firm, but none of the money reaches the mortgage company.

Testimony was presented to the Senators that seniors are targeted for these rescue scams because they are often dealing with illnesses, are widowed, or do not want to burden family members with their financial problems.

Secretary of the Maryland Department of Labor, Licensing and Registration, Thomas Perez advised that scammers normally target homeowners prior to foreclosure. “They receive an offer too good to be true, and that’s exactly what it is,” Perez said.

Senator Gordon Smith (R-Ore.) agreed that seniors are the sector of the population most vulnerable to fraud, “For many seniors, their homes are their life savings. That equity is all they have.

Committee chairman Herb Kohl (D-Wis.) pointed to consumer education as the “first line of defense against fraud.”