Lured by promises of a better interest rates and lower mortgage payments, some borrowers end up signing away their houses.
Thieves pose as mortgage professionals or attorneys who pledge to modify or refinance the homeowner's mortgage. The borrower is asked to sign the supposed modification papers. One of the pages in the stack of documents is a deed that once signed, transfers ownership of the property to the perpetrators or a company related to them.
While many homeowners would be able to spot such an ingenious trick, others don't bother to read or simply don't understand the documents they sign, says Brian Sullivan, a U.S. Department of Housing and Urban Development spokesman.
Often, borrowers are so focused on the numbers, including the new, low interest rate and the monthly mortgage payment, that they forget to read the rest of the documents and the fine print. They rely on what the con artist explains to them, Sullivan says.
"If somebody is smiling at you and promising you the world, alarm bells should be going off," he says.
Also known as bait and switch, this mortgage scam is specially a threat for borrowers who can't read English well.