Property Crossroads - Real Estate Info

(Part I) Con Artist Reveals Mortage Scams : “Straw Buyer”

by Maricel Ferrer-Custodio on February 28th, 2007

Brent Barber is a convicted con artist.  He was sentenced to twelve years in prison for masterminding one of the largest mortage frauds in the US.  He  pleaded guilty to a 5-year mortage scam that involved almost 300 properties.  More than 80 people were victmized in the prococess.

The first scam he discussed is using a straw buyer:

1)  A real estate investor will approach you and propose a deal to buy a property under your name.  He would reason out that the banks won’t lend him any money because his credit was maximized already.

2) He would then give you $1500 - $2500 for signing the documents.

3) He would pay the related costs from the transaction.

4) He would find a tenant to cover the mortgage or pay it himself.

5)  After a year, he would sell the property and share the profits with you; the straw buyer.

Not all of his straw buyers lost money, but most were stuck with the properties Barber bought in their behalf.  They were left with mortages they can’t afford.  Most lost their properties to foreclosure and several filed for bankruptcy protection.

Even lenders suffered losses in 205 of the 283 properties he bought.

Most of his victims were elderly people because they have the documents the bank needed, a high credit score and low bills to pay.

Barber’s recommendations to avoid this scam:

If someone offers you a real estate deal…

a) Verify where he lived for the past 10 years

b) Ask for bank references and make sure you speak with them.

c) Check his credit score.

d) Ask to see his tax returns.

e) Find out if any lawsuits were filed against him.

My advise:

If a deal is too good to be true, then it must be.  Be wary of having any deals with a stranger, no matter how friendly they are or how good their proposal is.  If it is going to cost you a lot of money and your house, then you better think twice.  Try to verify the validity of the deal, the pitfalls, and if its worth the risk. Check on the track record of the person you are dealing with.  Always read the fine print before signing any document.  Seek legal advise.  If you don’t understand how everything works, then it’s better not to commit yourself with the deal.  Ignorance can be very costly. 

To read more about this article, go to usatoday.com

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• (Part II) Con Artist Reveals Mortage Frauds : “Stealing your House”
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POSTED IN: Breaking News, Real Estate Scams, Real Estate Terms, Real Life Stories