Housing scams target renters

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(MoneyWatch) Mortgage scams are everywhere. And it's not only vulnerable homeowners that fraudsters have preyed upon since the housing collapse -- they're also targeting renters.

"Rental scams have increased dramatically in the past four years since the economic downturn," says Michael Schaffer of Checkyourlandlord.com, a service that provides background checks on landlords and properties. "Unfortunately, it is the type of thing that goes unreported a lot."

Unlike with mortgage fraud, the FBI doesn't have much information on how prevalent rental scams are. But the anecdotal evidence suggests that they are common, with many people reaching out for help to experts like Schaffer and Dan Daugherty, founder of CEO Rentbits.com and the brains behind Rentalscams.org, a website that educates people on scams.

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"In the summertime, too, we see a dramatic increase in rental scams," Daugherty says. "A lot of people are moving. College students are looking for places in college, many are little more naive, so we see a lot [of it] happening now."

And with many former homeowners opting to rent following the housing bust, the rental market also has become more competitive. That mean there's more money to be made off desperate renters. Here are three of the most common rent scams:

Too good to be true

The scam: You see a great apartment at a great price -- a really great price. You email the person on the listing, who happens to be a missionary working in Africa (or some other far-flung place). They ask for a deposit via wire transfer and promise to send the keys. But the keys never come.

This is a variation on the Nigerian wire scam. The scammer has copied a listing, only they've lowered the price and made up some excuse about why they are never in town. The ploy is obvious enough that few people fall for it. But in Nigeria, where most people live on around $3,500 a year, they only need one person to fall for it, Daughtery says.

The easiest way to avoid this scam is simple: Don't send someone money for a place you've never seen. Make sure you sign the lease with the landlord or a representative in person.

Unintentional squatting

The scam: You find a nice home, go to see it, sign a lease, hand over a deposit and the first months' rent, get keys and move in -- only to find out that the person you rented from has no connection to the home. Worse yet, they're long gone.

This scam has rippled its way through the foreclosure-ridden housing market, taking advantage of the abundant vacant properties around the country.

"These scams are much more sophisticated," Schaffer says. "You can actually meet someone at a property who has keys and appears to own it and, literally, they've just broken into it and changed a lock."

To avoid this one, ask for the property owner's name and ask to see the ID of the person showing the home. Do a property records search in the county where the property is located. Sometimes just asking for ID will spook a scammer.

Renting the home you don't own

The scam: You rent a home directly from the homeowner. A few months later, the bank comes knocking on your door. The homeowner you rented from defaulted and is in foreclosure, leaving you facing eviction.

This one is harder to avoid, because a homeowner can legally rent a home they still own, even if they've stopped paying for it. But by checking county records, you can usually see if a home is in foreclosure. And if the bank does show up, remember that you have the right to stay in the house until your lease ends -- you just may need to go to court to defend it.

The best way to avoid scams is to trust your gut. If something seems off, walk away.

"There's always another property, and I think that's something that prospective tenants very often ignore," Schaffer says.

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    Ilyce R. Glink is an award-winning, nationally-syndicated columnist, best-selling book author and founder of Best Money Moves, an employee benefit program that helps reduce financial stress. She also owns ThinkGlink.com, where readers can find real estate and personal finance resources.