Can you spot the fraud in this rental ad? It looks like your typical Internet home-for-rent ad. This one happened to be on Craigslist and the fraud could cost an unwary renter thousands of dollars. Here’s the scam: the advertiser doesn’t own the house at the address. Freddie Mac does. It was never for rent and it’s scheduled to close next month. (Craigslist immediately pulled the ad after they were notified about the problem.)
Freddie Mac’s fraud unit is teaming up with real estate professionals who list HomeSteps homes to sniff out bogus rental ads of REO properties — a growing problem, according to Freddie Mac.
“We’re hearing more reports about fraudsters trying to cash in on the housing crisis’s remaining foreclosed homes by advertising them as rentals on the Internet,” writes Freddie Mac in a recent blog post warning about the Craigslist REO rental scams.
The scam works like this: After a house is sold at foreclosure, a scammer then posts an ad online trying to rent out the home before the new owner moves in. Interest renters then contact the scammer about leasing the property, and they are asked to submit their personal credit information for the lease application as well as two months of rent.
It’s often not until the would-be renters try to move in that they realize they’ve been duped: The key to the house doesn’t work or they find the house is for sale or even that the previous owners are still living there. There have been some cases where scammers change the locks in the house and give the renters a working key. It’s the real estate listing agent who then showed up with the sheriff to secure the property to discover the renters living there unaware of what was happening.
There’s also nothing stopping the fraudsters from using the personal credit information on the rental application to open up credit card accounts or commit other acts of identity fraud against the victim.
In response, Freddie Mac’s fraud unit is working with the 2,300+ professional Realtors who list the HomeSteps homes to identify bogus rental ads so they can immediately tell the Internet providers to cancel the ads.
They’re also warning renters on how not to be duped from the ads, such as always verifying the home’s status through a listing agent or through county records and to never send personal credit information over the Internet until you have independently confirmed all of the facts about the rental property being advertised.
Freddie Mac is committed to fighting fraud by alerting the public to new scams and by training real estate professionals through special seminars and Freddie Mac's website, where they post the latest fraud prevention information and best practices.
Source: “Caveat Renter: Fraudsters Falsely Advertising REO as Rentals,” Freddie Mac Blog