Stop Scamming Us

First Part of Scam

A homeowner that is behind in her mortgage enters into a deal with an investor/buyer (scammer). The scammer convinces the homeowner to give the title to her home in exchange for the ability to lease the home with the option to repurchase it over the next few years (known as “leaseback” “buy back” or “option to purchase”). The scammer somehow convinces the homeowner that deeding over her property to him, or to his company, is the only way to save her home from foreclosure.

Oftentimes, the homeowner is told by the scammer that the surrender of the property is necessary in order to clean up her credit so that she may buy back the property at a later date. In short, the scammer will have the homeowner sell the property to him or a "straw buyer" for an amount substantially greater than the total amount that the homeowner owes on the mortgage.

Instead of the homeowner receiving the equity from the sale of the home to the straw buyer, the scammer keeps the proceeds for himself, splits it with the straw buyer, or convinces the homeowner that the money will be kept in escrow for her to receive when it is time to buy back the home. The money is never kept in an escrow account, but rather is put into the personal account of the scammer, who then uses it for his own use.

Second Part of Scam

The second part of the scam involves the loss of the home. After the deed/title of the home is given to the straw buyer, the homeowner is then evicted from the home because she will not be able to pay the new, high rent that the scammer is asking for. The scammer knows from the beginning that the homeowner will not be able to afford the new rent (the new rent is never disclosed to the homeowner until after the scammer takes the title). The scammer almost always includes a provision in the lease that states if the homeowner misses one or two rent payments she will give up her right to repurchase the home and will be subject to eviction. After the eviction, the scammer will either put the home on the market, sell it for more than what he bought it for from the unsuspecting homeowner to walk away with even more equity, or he will simply let it go into foreclosure. The leaseback option mentioned herein is usually impossible for the homeowner to succeed for two reasons:

1. The amount of the leaseback is greater than what the monthly mortgage payments were, which means the homeowner never stood a chance of being able to pay rent (think about it, if the homeowner was struggling to pay her old mortgage of $1,500.00 per month, wouldn't she have an even greater problem of paying rent in the amount of $2,500.00?); or
2. The cost of the home has been significantly inflated due to the resale, and the homeowner’s credit and income will not be strong enough to qualify for new financing to purchase it back(Set up to fail).