Foreclosure Rescue Scams, Reverse Mortgage Fraud To Increase, Says FBI

A recent USA Today article reports on the FBI and their work in pursuing mortgage and real estate scams. Included in the story is this except regarding scams involving foreclosure rescue and reverse mortgages:

• The FBI expects more foreclosure scams as criminals prey on growing numbers of people desperate to keep their homes while interest rates balloon on adjustable rate mortgages, [FBI financial crimes section chief Sharon] Ormsby says. She also expects increasing fraud in "reverse mortgages," in which homeowners 62 or older can take out a loan against the equity in their home. Unlike a traditional home-equity loan, the borrower doesn't pay back a reverse mortgage until they sell the home.

***

• In [one type of] scam, people posing as "foreclosure rescue" experts persuade homeowners with bad credit to sign over their deeds to a third person who can get a second mortgage against the home. The "expert" pockets the cash and defaults on the loan. A New York grand jury charged six people with fraud last month for allegedly stealing more than 80 homes in this way.

For more, see FBI: Housing scams more than double.