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A downside of “laissez faire” (free enterprise) is that the buyer should really always be aware of possible fraudulent transactions. A good source of great house buys is the list of foreclosed properties which could be obtained from your local bank or any government office offering affordable housing nearest you.

Some companies tie up with government organizations and market these foreclosed properties to unsuspecting buyers without fixing the problems in basic utilities in these areas such as water, electricity, garbage disposal and sometimes even the roads within the subdivision. When homeowners ask when the problems are going to be fixed, the standard answer is, they will attend to it at the soonest possible time. In one case, a unit was bought by an overseas contract worker where the company failed to provide a new water tank to the subdivision (after the original one was toppled by a particularly strong storm almost two years earlier). Living in an area without good water supply is really unacceptable! Other problems piled up within that particular area so much so it came to a point where the first buyers put up streamers at the gate warning other prospective buyers not to buy any property there. To sum up; first, do your homework. Inspect the property so you know exactly what to expect before letting go of your downpayment. It would be wise to talk to the current homeowners to get an accurate picture of the area. Second, determine whether the property advertised is what you are really looking for. Is this what I really want? or need? Is this place worth all the trouble (assuming your inspection reveals certain challenges) or should I look for another one? You need to do these basic steps so ensure buying your dream house doesn’t turn into a nightmare.

What is affinity fraud? It’s a term in real estate where someone uses their position in a religious community to build faith with investors. This usually happens with devout members of an organized religion, that are active in their local community. Affinity fraud is especially devastating because of the level of trust and confidence the victims give to the scammers. Often times, people who are behind these scams are people who are looked up to or are viewed to have a high ethical and moral standing in the community. That’s why some victims, even after the scam has been revealed and their finances endangered, refuse to believe that they have been used. They may even refuse to prosecute the scammer, choosing to believe instead that the scammer will return their investments. Tragically, in most cases, the victims are regular wage-earners who have chosen to invest life-savings they can ill afford to lose.

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Nowadays, many people are fooled easily by the great promises that some real estates agents say. Here are some tips to avoid real estate fraud:

Always, always, always understand what you are signing and agreeing to, and, always seek assistance from a skilled real estate attorney. If you do not understand something you’re being asked to sign, ask for clarification and re- read the document again before signing.
Ask for and check referrals and references for real estate industry professionals. Check the licenses of the real estate professionals with state, county, or city regulatory agencies. Make sure that the people you’re dealing with are in good standing with the appropriate regulatory bodies.

Be suspicious of such low investment. If it sounds too good to be true, it probably is.
Be wary of strangers and unsolicited contracts, as well as high- pressure sales techniques and people who play to your emotions.

Extreme caution against this kind of people should be greatly measured.

A Ponzi scheme usually offers abnormally high short-term returns in order to entice new investors. The high returns that a Ponzi scheme advertises (and pays) require an ever-increasing flow of money from investors in order to keep the scheme going.

The system is doomed to collapse because there are little or no underlying earnings from the money received by the promoter. However, the scheme is often interrupted by legal authorities before it collapses, because a Ponzi scheme is suspected and/or because the promoter is selling unregistered securities. As more investors become involved, the likelihood of the scheme coming to the attention of authorities increases.

The scheme is named after Charles Ponzi, who became notorious for using the technique after emigrating from Italy to the United States in 1903. Ponzi was not the first to invent such a scheme, but his operation took in so much money that it was the first to become known throughout the United States. Today’s schemes are often considerably more sophisticated than Ponzi’s, although the underlying formula is quite similar and the principle behind every Ponzi scheme is to exploit lapses in judgment arising from investor naïveté.

Definition of Real Estate in the Web According to Google

• A portion of the earth’s surface extending downward to the center to the earth and upward into space, including all things permanently …
  realestate.aol.com/glossary
• Land and anything permanently attached to the land whether by nature or by person.
  www.rileycountyks.gov/index.asp
• an identified parcel or tract of land, including improvements, if any.
  www.lucianoappraisals.com/gpage4.html
• Term for land and all fixtures to land, including buildings and other improvements.
  www.assignmentscanada.ca/definitions/realestateterms.html
• Land, including all inherent natural attributes and man-made improvements of a permanent nature placed thereon.
  www.buckeyereserve.com/glossary_of_terms.htm
• Land and anything permanently affixed to it, including buildings, fences and other items attached to the structure.
  www.metrolibertymortgage.com/commonterms.html
• One who is licensed by the state to carry on the business of dealing in real estate. A broker may receive a commission for his or her part in bringing together a buyer and seller, landlord and tenant, or parties to an exchange.
  www.titleguarantynm.com/glossary/glossary_b.asp
• Land and all physical property on, below or attached to the land. Houses, sewers, trees and fences are all real estate.
  www.ncbuy.com/credit/glossary.html
• A term which is used to describe land. Real property is transferred by a deed. All other property is known as personal property.
  www.national1credit.com/Commonly_Used_Legal_Terms1.html
• Land and its appurtenances (attachments such as buildings or other structures or improvements)
  woodmoorsite.com/glossary.html
• Includes real property, leasehold and business whether with or without premises, fixtures, stock in trade, good of chattels in connection with the operation of the business.
  www.ottawahomesandcondos.com/looking_buy_glossary.cfm
• This refers to the physical land and appurtenances, including structures affixed thereto. In some states, by statute, this term is synonymous with real property.
  www.charmeck.org/Departments/LUESA/Property+Assessment+and+Land+Records/Real+Estate/Real+Estate+Terminology.htm
• This is the land, appurtenances and all structures erected thereon. Usually used synonymously with real property.
  caruthersinc.com/glossary.php
• A piece of land and whatever physical property is on it.
  bank-street.co.uk/glossary.html
• land, improvements to the land (buildings), a mine or quarry, minerals, standing timber and any estate or interest in the previously mentioned property.
  www.appraisalrelief.org/en/cms/
• Commonly used to mean land and whatever is attached to land (such as houses, trees, fences and the like).
  svc013.wic009tp.server-web.com/social_justice/ntreport05/app1.html
• Homes, offices, or other land or buildings that you can invest in. An investor might choose to invest in a house if he thinks it is in a market where property values will rise in the near future.
  www.nfec.info/main/resources/glossary
• is land and any additions and improvements, such as buildings, sewers, sidewalks, and anything else considered to be permanently attached to the land. …
  thismatter.com/Money/Real-Estate/Tutorial/Realty.htm
• Land and those things erected or growing upon it, such as buildings, fences or crops. The term embraces items such as light, plumbing and heating fixtures when permanently attached.
  nesara.org/main/dictionary.htm
• Land including all the natural resources and permanent buildings on it. Specialized technician A person with the knowledge and skill needed to carry out a specific technical procedure.
  www.economicadventure.org/teachers/glossary_dec.cfm
• A section of land including all the natural resources (above and below the surface) and any permanent buildings or structures located on it. See also “Real Property.”
  www.canequity.com/mortgage-resources/
• This is the land itself and all things permanently attached to it.
  www.one-ifbyland.com/dictionary.htm
• Such gifts will be counted at fair market value as determined by a qualified third-party appraiser, subject to IRS rules and regulations.
  www.wvuf.wvnet.edu/Text/tdefinition.htm
• Land or land and improvements. Statutory law may broaden a definition of real property to include, for example, mineral rights or machinery permanently attached to a building. …
  www.co.gwinnett.ga.us/cgi-bin/gwincty/egov/ep/gcbrowse.do
• real property: property consisting of houses and land
  wordnet.princeton.edu/perl/webwn
• Real estate or immovable property is a legal term (in some jurisdictions) that encompasses land along with anything permanently affixed to the land, such as buildings. …
  en.wikipedia.org/wiki/Real estate

Los Angeles FBI recently released a statement regarding the latest real estate fraud scheme. Lo and behold buyers, sellers and lenders… lend me your ears. This new scheme has indeed victimized a lot of people already. How do they do it?

1. Fraudsters tour villages. They pick a house they would like to steal. Yes, steal.
2. With a few searches on the internet (using your house address), they will get the name of the owner of the house and use that information to make fake documents (social security IDs, credit ratings etc.)
3. They then buy transfer papers from office supply stores (lots of these around the corner).
4. After doing everything, they will go to the authorities and transfer your house into their names. Ta-da! Your house is theirs now.

Photo taken from http://gjha.org

The FBI indeed has changed its focus. They have been working hard to pin down real estate fraudsters and scammers, making this white collar crime as one of their top priorities. In 2003, a total of 215 case initiations were filed but come 2007, the data indicated that there were at least 490 cases filed against the fraudsters. The FBI is still keen in chasing behind scammers since the real estate economy is not doing well (due to the sub-prime issue). They have released in their recent press release that they are investigating a total of 1,300 real estate fraud cases (more or less) to date.

Photo taken from http://www.ersnews.com

It is a shame for an Ex-Mayor’s to be tarnished with scandals—more so if the scandal is related to real estate fraud . New Jersey’s Ex-Mayor Sharpe James, together with his girlfriend Tamika Riley, were found guilty on all 5 counts: three counts of mail fraud (by selling low valued city lots to Riley), one count for obtaining funds from the state for the local government and one count of conspiracy in an effort to fool the public.

The flipping scheme allowed James to obtain low priced lands which he sold to his girlfriend for $46,000 (9 properties all in all). Riley then sold the properties for more than a total of $600,000.

Photo taken from http://blog.kir.com

As we all know, there are a lot of modus operandi (MO) surfacing in today’s real estate fraud. Most often than not, they adopt MOs that include faking documents to be submitted to lenders and buyers (both have different amounts indicated), identity theft, doctoring financial documents so that the buyer can get a loan from the lender and so on and so forth. But FinCEN, or the Financial Crimes Enforcement Network said that most of these scammers, an estimation of 75%, are not real estate agents/brokers by profession? Most of them are civilians just like you and me. Now, this trend actually should act as a wake up call to those lenders and buyers that they should be careful about their dealings.

Photo taken from http://www.fillthevoid.org

Guilty was what Anthony Fields, a mortgage scammer from Pennsylvania, pleaded before Judge Ambrose to one count of mortgage fraud conspiracy. He connived with his sister-in-law, Kelly Fields who was an unlicensed real estate broker. Their modus operandi involved recruiting buyers to buy properties with a much higher price compared to the true value of the property involved. The sister-in-law then gave lenders fake documents that have higher loan amounts in them and doctored documents for the buyers just to get the said loan. The law states a total of 20 years behind bars and/or a total of $250,000.00 fine.

Photo taken from http://www.516lawyer.com