Whenever there is a boom, people are getting burned through various scams because of their greed to double their finances on some dodgy scheme. The latest story of an investor scam has now surfaced in the US as Frances Greenspan of Orange County files for her rights with the District Attorney.
Greenspan took out not only one, but three loans after having been recruited at a friend’s place by a Northern California businessman to lend her name to a mortgage transaction for three properties for a payment of $30,000 with no down payment.
She didn’t even protect herself with a contract and now she is faced with a ruined personal credit because instead of having her name taken off the deed right away as promised, she was made liable by the banks for the loans and to make matters worse, all three units are now in foreclosure.
Greenspan isn’t the only blue-eyed investor who got done with a deal like this it seems. Sadly enough, the deal sounds too good to be true right off the bat and we are shocked that people keep falling for ploys like these even in the modern age of technology, when we are being warned about these type of schemes all the time.
Across California alone several investors fell prey to their own greed just as Greenspan has done. In return for “lending” their name to new loans they were promised $5,000 to $10,000 per loan.
They understood that the homes purchased on their behalf would be quickly transferred out of their names, and gone would be any financial obligation. But this never eventuated, instead, their names stayed on the deeds, and they remained responsible for hundreds of thousands of dollars in loans.
Reports claim that they were lured to this scheme by a James McConville, of Diamond House Development, a Fremont company whose corporate status is listed as suspended by the secretary of state. McConville was charged and convicted of grand theft back in 1998 and sentenced to five years probation according to the Senior Deputy District Attorney William Denny.
Schemes like these seem to appear everywhere, especially when there is a booming real estate market. Prices are inflated, investors are lured by their greed to make easy money, buyers default on the loans and banks make investors pay for their greed.
Sadly, even though we know these things happen, many just can’t resist the “promises”.
It is clear that these investors were being taken for a ride on their own expense and that McConville has made a hefty profit in the meantime. Interestingly enough he couldn’t be reached by anyone and his voice mail is full.
Another disturbing factor in the whole saga is the fact that investors paid top dollar for these condos back in March 2008, even though the market was already showing signs of distress.
We simply can’t stress enough to buyers to take care of schemes like these, especially if they sound too good to be true. One big warning sign is the absence of a legal contract!
What do you think? Should these investors have seen the warning signs?
Photo credits: SignOnSanDiego.com