It’s a jungle out there. You knew that already, of course. But there seems to be something about our troubled economic times that’s bringing out the schemers, the scammers and the less-than-straightforward, many of whom have zeroed in on housing.

With the word "foreclosure" on so many lips, it’s probably not surprising that con arts have found ways to prey on others’ misery by promising to "fix" loans that have gone bad. But renters need to tread carefully these days, too, according to consumer advocates and law-enforcement representatives.

It’s a jungle out there. You knew that already, of course. But there seems to be something about our troubled economic times that’s bringing out the schemers, the scammers and the less-than-straightforward, many of whom have zeroed in on housing.

With the word "foreclosure" on so many lips, it’s probably not surprising that con artists have found ways to prey on others’ misery by promising to "fix" loans that have gone bad. But renters need to tread carefully these days, too, according to consumer advocates and law-enforcement representatives.

Five things to keep in mind for renters and homeowners who want to keep other people’s hands off their wallets:

1. Scams that promise they can arrange loan modifications for homeowners who are facing foreclosure "are the single largest set of complaints we’re receiving right now," said Stephen Robinson, chief of the Economic Crimes Division for the San Diego County District Attorney’s Office.

"They make a representation that they can get your loan modified," said Robinson. All you have to do, they promise, is pay them a fee upfront, and they’ll take care of the rest. While a few companies may offer genuine assistance, it could be a scam, and the payee may disappear with your money, he said.

The upfront cash requirement is a major red flag, said Steve Bernas, president and chief executive of the Better Business Bureau of Chicago and Northern Illinois. "If somebody wants money ahead of time and they guarantee to help you with your mortgage payments or to amend the loan in any way, you’ve got to be wary."

Robinson said it’s illegal for companies to get paid in advance for such services (with the exception of legal services from one’s attorney) in more than 20 states.

Bernas said consumers seeking loan modifications should work with their lenders first before seeking additional help; also, housing counselors certified by the federal Department of Housing and Urban Development will work, without charge, to help homeowners who may be eligible for loan modifications, he said.

2. Foreclosure "rescues" are the first cousins to loan-modification frauds, Robinson said.

"The pitch is, we can stop the foreclosure process by filing for a ‘federal land grant’ for your property," Robinson said. …CONTINUED

This land grant — according to the folks making promises — takes a superior legal position to your lender, he said.

"They’ll tell you it stops the foreclosure and the lender will be frustrated and won’t be able to force the seizure of your house," he said. "They’ll tell you that a statute of limitation is in effect, and after four years (of this so-called land grant), you’ll end up owning it free and clear again."

Robinson said one approach charges $10,000 for the "land grant," but since most people in foreclosure can’t come up with that cash, the scammers may suggest, instead, a leaseback scheme in which the homeowner deeds the land to them and pays monthly rent. After four years, the scammer explains that he and the homeowner will end up owning the house 50-50, which sounds better than losing the place entirely, he said.

3. Renters aren’t immune to too-good-to-be-true pitches.

One popular scheme these days involves the perpetrators lifting a real estate agent’s online photos and information for an attractive residence that’s currently for sale — and then placing an ad on a free online classified-ads site that purports to offer the house for rent at below-market rates, Bernas said.

"The pitch (from the ostensible landlord) is, ‘We’re leaving town quickly because we’re going to do missionary work in Africa’ " and thus are offering the place at an excellent monthly rate, Bernas said.

In fact, the landlord says he’s leaving town so quickly there’s no time to show it, and so the tenant will have to go by what’s in the ad and wire the first and last month’s rent to the landlord (at an address that’s inevitably somewhere abroad) and the keys will be sent, he said.

Incredibly, this works (in the criminal’s favor) more often than you’d think, Bernas said. "The price is so low, and people don’t want to pass it up. But they’re not doing their homework."  

4. In some cases, a would-be renter can actually see a house in person, escorted by the "landlord" — and still get fleeced, Robinson said.

In these scams, the criminal identifies homes that are in foreclosure, either by examining public records or doing drive-bys that single out foreclosures that are no longer occupied, he said. …CONTINUED

"He checks the trustee’s sale date (of the foreclosure action) and knows it will take a while" before anyone buys it and a new resident will be moving in," Robinson said.

The criminal breaks in, changes the locks, advertises the home on free online classified sites, and shows the house to a prospective tenant.

"In many cases, the rent is below market rates in order to rent it fast," Robinson said. "He takes the first and last month’s rent and a security deposit, and sometimes collects rent for even longer."

When the house is sold or the bank comes around to check on the place, the tenant finds he has no legal claim and is out at least a couple of months’ rent.

Unfortunately, Robinson said, there aren’t necessarily red flags in such schemes — after all, a person who claims to own the house is physically present, he seems to have the run of the house, and for all intents and purposes, looks like a legitimate landlord.

5. What to do?

If you smell a rat, there are several avenues for finding help. Robinson suggests reporting fraud — confirmed or merely suspected — to your local prosecutor’s office.

Bernas said consumers can check out many local businesses through national and local Better Business Bureau sites, accessible at www.BBB.org.

In addition, state and local governments have consumer advocacy services; a complete listing is available at www.consumeraction.gov/state.shtml.

Mary Umberger is a Chicago-based freelance writer.

***

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