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Rental Scam Hits Foreclosure Market

NEW YORK ( TheStreet) -- Renter beware. It appears fraudsters are advertising foreclosed homes meant for sale as rentals on the Internet.

In a blog post , Joan Ferenczy, Vice President, Financial Instrument Fraud Officer at Freddie Mac says recently a featured rental ad on Craigslist for a three-bedroom single family home did not belong to the advertiser.

It was a foreclosed home owned by Freddie Mac and was never meant to be rented out. Freddie Mac notified Craigslist, which then pulled the ad.

Ferenczy says the agency is hearing of more reports of scamsters placing rental ads for foreclosed homes before they are sold. They lure would-be renters into providing personal financial information, not to mention advance rent deposits. Renters have no idea that the homes are not for rent until they move in and find the keys won't work. In some cases, the fraudster changes the locks and the renters move in, only to be evicted later by the foreclosure real estate listing agent and the local sheriff.

Freddie Mac's fraud unit says families shopping for rentals should verify if the homes are actually for sale by driving by the homes to look for "for-sale" signs and calling up the real estate listing agent to confirm its status. Checking county land records also can confirm who owns the house.

-- Written by Shanthi Bharatwaj in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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