Fake Landlords Renting Foreclosed Homes

Imagine losing your home to foreclosure and then having criminals steal the deposit money you paid to rent a new home. This is the situation several California homeowners faced this week and one that many families could face nationwide. It’s a new twist on an old scam that is being facilitated by today's foreclosure crises.

Last week California district attorneys in Solano and Alameda counties reported several calls to their offices from people who had been taken by scammers pretending to be property owners or bank representatives with homes to rent. Con artists are taking over empty homes, advertising them for rent and then running off with the deposit. All the scammers need is an unoccupied home and a family that is desperate to replace a home lost to foreclosure. Even educated realtors can become victims of this crime.
 

One realtor who has witnessed the fake landlord scheme firsthand is Brian McPherson. Not long after he emptied a Vallejo county foreclosure and put the home on the market for the lender, McPherson drove by the newly listed property. He found that for-sale signs he had placed there earlier were missing, the lights were on, and the locks changed. McPherson called the local electric company to learn the account had been transferred from his company name to a private party, according to a report by KTVU.com. The family living in the home said they had leased the property from a company called “Big Sky.”

This isn’t the first time McPherson, owner of Tipp Realty, has witnessed the scam.

"I saw it back in the 1970s when there were a lot of foreclosures," said McPherson to the Contra Costa Times. "It works best when there are a lot of abandoned, bank-owned properties that Realtors can't keep an eye on."

McPherson said scammers usually entice renters with low rates, and advertise the properties in online classified ads on sites like Craigslist or in the local newspaper. Then they draw up a fake lease and ask for a cash deposit.

Last week Police in Carlsbad Cal. arrested two men advertising a home for rent on Craigslist they didn't own. The men allegedly collected thousands of dollars in security deposits and rent before being arrested.

Renters can protect themselves from fraud by checking the property title or tax records at the county recorder's office. Alternatively you can hire a local title abstractor to conduct a ‘current owner’ search. An experienced abstractor can determine who owns the rental unit and any liens against the property that might trigger another foreclosure and put the renter back on the street. Title companies can also provide this service may expect their customers to buy title insurance that isn’t generally available to renters. An experienced independent abstractor can conduct the same research for 45 to 150 dollars for residential searches. You should look for an independent local abstractor who lives in or near the county. SourceOfTitle.com maintains an extensive directory of independent abstractors.

You can also check the rental agency's license with the state licensing bureau. Home buyers can find and verify Realtor credentials at HomeGain.com