Late, but important SCAM notice - Posted by John Behle


#1

Posted by Irwin on January 02, 1999 at 19:18:31:

It isn’t at all unusual for title companies to miss recorded mortgages these days. Not all states require that a notice of default be recorded. Mine doesn’t. The first public notice of default is the filing of the foreclosure suit.
Also, could someone posing as a lender, even one that is foreclosing, sell the property.
I base my conclusion that this wasn’t a scam on the fact that the owners told the potential buyers about the mortgage. Now they won’t buy it and that would defeat the pupose of the whole scam wouldn’t it?


#2

Late, but important SCAM notice - Posted by John Behle

Posted by John Behle on January 01, 1999 at 16:52:44:

I just noticed the postings below about the property in foreclosure that supposedly has no loan. It sounds way too much like a scam that hit several states about a dozen years ago, so I am adding my post to the top of the board here too.

This sounds like a version of a scam hatched in prison and then spread through Utah and several surrounding states.

The criminal fraudulently re-conveyed the trust deed on a certain bank’s loans. They even had a convincing forged signature of the woman at the bank that would have signed the re-conveyance - if it were real.

They then contacted agents and said they were a lender from Colorado that had to foreclose on the home and they just wanted a quick sale. They sold the properties below market with a low down on a contract and then sold the contract. Title insurance covered the sale and paid off to the note buyers.

A simple title search by anyone would have revealed the problem.

In your deal, go search the title. Even if you are going to pass, it can be interesting. It may be that the first loan was fraudulently re-conveyed and their is no foreclosure.

The title company doing the search may have found the loan and the re-conveyance that cancels it out. The fact that they did not find or report that there is a notice of default makes it sound real fishy. Check it out at the County Recorder’s office.


#3

Re: same scam-different twist - Posted by Irwin

Posted by Irwin on January 02, 1999 at 07:28:19:

John:
I don’t think the posted deal was a scam. If it was, the owner would never have told the buyer that there was a mortgage against the property. The scam is based on a forged satisfaction of mortgage, or in your example a recoveyance of a deed of trust. The party in possession, then sells it as a free and clear property, but at a discount from fmv because of some supposed financial problem. Astute title examiners will sometimes check with a lender to see if the loan is in fact paid off, but this is a tough one to catch if the scammer has done his homework.
I could be wrong, but the case posted here appeared to be one where the title company had just overlooked the mortgage. Perhaps the poster will favor us with a follow-up on what happened.


#4

Re: same scam-different twist - Posted by BankRobber

Posted by BankRobber on January 03, 1999 at 10:21:33:

The scam you outlined seems much more plausible (simple yet effective) than the scam John outlined. One would think that a criminal sophisticated enough to forge and record a fraudulent Satifaction of Mortgage/ Release of DOT would be be smart enough to set up an out of State Mortgage company, then record a new Mortgage/Deed of Trust in favor of the new company. Wait six months then sell the property. Thus when the Title company researched Title they would have less reason for suspicion.


#5

Totally Incompetent Title Company?..OR? - Posted by John Behle

Posted by John Behle on January 02, 1999 at 12:27:58:

The post mentioned that the loan was only a couple years old and hadn’t been assumed. It also stated they were in foreclosure.

To miss a two year old loan that hadn’t been assumed would be hard, but not impossible. To also miss a recently recorded Notice of Default would be a new low in title work. Of course it could be in pre-foreclosure with no default filed yet, but it is either fishy or the most imcompetent title company in the Milky Way Galaxy.

It is very simple to pull an abstract of title to avoid these type of scams. I do it on any property or note I buy. It just takes a few minutes and can avoid a great deal of time, effort and cost - as well as a potential loss.


#6

Posed as a Mortgage company - Posted by John Behle

Posted by John Behle on January 04, 1999 at 14:33:23:

Probably should have added more details. They purchased the properties low down assumption (subject to). To justify why they were in a rush and needed to sell quickly - they said they had acquired the properties by foreclosure - to the listing agent.

Then they sold for a low down on a contract what appeared to be a free and clear property. They sold the paper, made payments for a couple months - to be able to consumate enough deals, then took the money and it all collapsed.

Anyone checking the title that knew their “story” would have seen that it had not been foreclosed or even in default and that it was not titled in a mortgage company. Not really all that sophisticated, but illustrates the need for title insurance and the value of being able to pull your own abstract to avoid wasting time, money and effort.

We had another that claimed the property was free and clear. I was trading notes for the property and had initiated a mortgage loan, paid for an appraisal and even sent a crew to begin fixing the property up.

When I checked the title, I found it wasn’t free and clear, but had two mortgages 100%+ LTV and was two weeks from sale. There’s no way they could have pulled off the scam, but they wasted my time and money - and taught me a lesson, that I always follow and few others do. Spend a few minutes, pull an “abstract” and know what you are dealing with. It saves many deals and steers me away from a lot of time wasting transactions.