Identity-theft con artists creative in targeting homeowners in scams

WASHINGTON -- The sagging housing market has presented swindlers with a perfect opportunity to prey on troubled owners. But even owners who are sailing right along, making their payments on time and otherwise keeping their noses clean also are susceptible to being cheated out of their homes.

Financially strapped owners are considered easy marks because they're more likely to believe almost anything crooks tell them in order to save their homes.

Even if an owner isn't behind on his or her payments but just wants to sell and move on, instability in the housing sector "has created an ideal environment" for fraud, the Federal Bureau of Investigation says in its latest alert.

But the feds note that owners who are just sitting there minding their own business also are becoming targets. How? By stealing your identity, con artists can also steal your house.

One of the up-and-coming schemes noted in the FBI report is one in which the swindler establishes a line of credit in his name based on the equity you have in your property and then drains the house dry.

In another ploy, the con man actually steals the house itself by changing the title over to his name and then selling it out from under the rightful owner.

Of course, as the rightful owner, you really won't lose your house. But the burden is on you to prove that you, indeed, are the real owner and that someone swiped your identity to carry out a false transaction. And that could cost you hundreds of hours and thousands of dollars.

Identify theft is defined as the use of someone's name, personal-identifying information and credit history without their knowledge, and it is a growing problem.

According to the Federal Trade Commission, more than 8 million people fall prey to ID thievery every year, and losses resulting from the crime total more than $15 billion annually.

According to the U.S. Secret Service, which prosecutes federal cases, in half the cases, it is a business -- not the individual -- that allowed criminals access to someone's private information.

That's why Congress last fall passed the so-called "red flag" rider to the Fair and Accurate Credit Transaction Act of 2003.

The provision, which takes effect Nov. 1, requires financial institutions, creditors and anyone else who handles your personal-identifying documents to develop a program to prevent ID theft.

That law applies to real-estate companies, builders, lenders and mortgage brokers as well as banks and stock-brokerage firms.

The rider identifies 26 possible signs that companies must look for to keep someone from snatching your identity.

They include such potential symptoms of criminal activity as consumer-activated fraud alerts in a client's credit report, documents that appear to be altered or forged, and consumer-provided addresses and Social Security numbers that don't match those identifiers found in the client's credit report.

But when developing software that companies can use to help catch ID thieves, Sai Huda, chairman and chief executive officer of San Diego, Calif.-based Compliance Coach, found 23 other "indicators" that something illegal may be afoot.

And since companies don't have to check for those, consumers are still largely on their own when it comes to combating identification theft.

House stealing, which the FBI calls "the latest scam on the block," works like this: The con artist picks out a house and then assumes your identity by somehow pilfering your name and personal information and then using it to create fake IDs, Social Security cards and what-have-you.

Then the con goes to an office-supply store and purchases the forms necessary to transfer the property to someone else.

After forging your signature, he files the papers with the proper authorities, and before you know it, the government, lenders and possibly even real-estate agents are tricked into believing the place is now his.

Often the bad guys target an empty house, say, a vacation home in a seasonal resort.

They go through the process described above, then put the place on the market, sell it to some unsuspecting buyer and pocket the proceeds. Not only is the rightful owner hoodwinked, so is the buyer and his lender.

In other cases, though, the fraudsters have been known to steal an occupied house and sell it to someone who is so enamored of the great price he is getting that he's satisfied with a few online photos. Or they pose as the rightful owner and take out home-equity lines of credit against the property.

Here's how the FBI describes a typical scheme used to drain a home's equity: "Perpetrators pose as customers to establish HELOC Internet account services and manipulate the customer account-verification process, including rerouting telephone calls, forging signatures, using passwords and reciting recent account history.

"For example, a perpetrator uses the account holder's identification information to contact a financial institution and request an advance of funds. Once the advance is granted, the perpetrator sends a facsimile to the financial institutions requesting that the funds be transferred to another account. On receipt of the facsimile, the financial institution contacts the account holder using the telephone number on record to verify the transaction. However, the call is unknowingly forwarded to the perpetrator who verifies the account holder's information to complete the wire transfer."

In one case prosecuted by the feds, the ID thieves used the name-change mechanism offered by all states for people who are getting married or divorced to obtain false driver's licenses.

Then they used the licenses to get Social Security numbers and proceeded from there.

In another case, the thieves deposited the proceeds from an illegal loan into a business account so they'd fall under the lender's radar And in a third instance, they drained the home-equity account slowly in hopes they wouldn't be spotted.

Because of the growing threat posed by house thieves, it behooves you to manage your personal information carefully and protect yourself against identity theft by, among other things, ordering a copy of your credit report on a yearly basis and reviewing it carefully for questionable entries.

You can obtain free reports at annualcreditreport.com.

Be sure to shred or cut up credit-card receipts, bank statements and bills before discarding them, remove your name from mailing lists for preapproved credit lines, keep your personal-identification number concealed when using an ATM machine, contact your creditor or service provider if you notice anything odd with a bill or the bill doesn't arrive on time or at all, and update your computer's virus software.

Also, don't provide any personal information over the phone or via the Internet unless it was you who initiated the contact, don't put your Social Security number on your checks and don't carry personal identifiers in your purse or wallet.

Lew Sichelman has been covering real estate for more than 30 years. He is a regular contributor to numerous shelter magazines and housing and housing finance industry publications.