I don’t mean someone selling the Brooklyn Bridge: When you are working with money, there is always a scam around. Some are easy to detect, others a bit harder.
This past week I was at a training class sponsored by Lawyer Title. They identified and shared with us the newest scam to be aware of. Sellers having a “dirty” Release of Lien. The release has been filed with the recorder’s office, so when the title company goes to provide clear title, there are no mortgage notes attached to the property. (Those have been released)
The scam is: the release if fraudulent. The seller still owes. The seller continues to make their payments, so no one is aware and once the home closes they walk away with all the proceeds from the sale of the home. Then they stop making payments and the house starts to foreclose.
When a call is made to the previous mortgage lender, the fraudulent actions are exposed. If this is detected by the title company prior to closing, the buyer is out of luck. They will get their earnest deposit back, but they won’t be getting the house. If it is not detected and the house closes, the title company is in for a big payment to the sellers bank as they guarantee clear title to the buyer.
So if a seller recently paid off their mortgage, and has the ‘paperwork’ to prove it. Be aware. Things may not be as they seem.
Always a new mousetrap, isn’t there, Irene? Just imagine if all of the brain power that went into ripping someone else off was diverted to fixing our financial infrastructure. We’d all have a house in the hills, with copper wiring and A/C compressors still in place to boot.