Beware of Rental Scams

Tracey Williams, a homeowner in the Washington, DC region, recently used Craigslist to help a friend in Atlanta find a rental home. One listing caught her eye — the rent was low for the Atlanta market and the owner, a pastor, had just moved to Cincinnati, so the house was immediately available. Photos in the listing showed the home to be in good condition and Williams’ friend drove by the home to confirm it was real and vacant.

Emails were exchanged, often closed with the pastor’s affirmation of doing “God’s work” and an Ohio address (if you searched the address on the Internet, it was actually a church). But Williams’ suspicions had been aroused. “He wouldn’t send us the key or have anyone show us the property until he’d received our money. And he wanted us to wire funds through Western Union instead of sending a check to the church address,” she explains. “It just wasn’t adding up.”

Luckily, Williams, who works in the mortgage industry, did not wire any money and instead reported the scam to the Internet Crime Complaint Center [1].

Hi-Tech Ops

Rental scams are rising in number because people want a good deal, especially in pricey rental markets, and are increasingly willing to conduct business electronically.

There are variations, but the basic scheme starts with the scammer finding an apartment or home on the Multiple Listings Service (MLS) or a website like www.HomePath.com [2], which lists Fannie Mae’s real-estate owned (REO) properties for sale. The scammer uses the description and photos, and might even include the listing agent (with altered contact information), and places a rental ad on a site like Craigslist, Trulia, or Zillow.

Victims call or email the scammer, who might say he’s a pastor, missionary, federal employee, or service member being deployed overseas, making it necessary to communicate via email. And if pressed to meet, or have an intermediary meet with the victim, they will smoothly explain away evidence like for-sale signs or lock boxes at the property. “Scammers are so convincing that some victims will have moved into the property, and not know they’re in the property illegally until contacted by the actual owner or law enforcement,” notes Deirdre Rogers, Fannie Mae’s REO anti-fraud manager.

Renter Beware!

Since many rentals on websites like Craigslist are legitimate, it’s up to renters to protect themselves— ask for proof of ownership (like a property deed or tax bill) to ensure the person you are dealing with has the legal right to rent the property. “The owner may be surprised, but if they are legitimate they’ll be able to produce something,” Rogers says. She recently followed her own advice while searching for a rental and, although it took a few days, was provided with proper documentation by the owner.

Renters can also verify property ownership by searching public records in person or over the Internet.

In addition, the National Association of Realtors (NAR) asks its broker-members to periodically check if their properties are listed on sites they shouldn’t be. “Unfortunately, even when we find a fraudulent listing, there’s not a lot we can do other than report it to the publisher and have them take it down,” notes Michael Thiel, an associate counsel in NAR’s legal affairs division.

According to Fannie Mae’s Rogers, publishers like Craigslist do act quickly to remove fraudulent listings and notify the listing party that they will no longer accept their advertisements. But by that time the scammer may be using a new name and email, and have listed several more homes, she acknowledges.

Until technology catches up, it’s best to conduct business face-to-face, and confirm property ownership before signing any agreement or sending any money.

Editor’s Note: If you think you’ve been the victim of rental fraud involving an Internet listing, you can file a complaint online [3] with the Internet Crime Complaint Center. Additionally, you can report possible fraud directly to Fannie Mae at Mortgagefraud_tips@fanniemae.com [4] or call our Fraud Tips Hotline at 1-800-7FANNIE (1-800-732-6643).