Deeds Scams Are Ruining Lives

Person dressed as a burglar trying to open a house door with a crow bar.

Panic in Detroit

Detroit should have had its moratorium on foreclosures a decade ago. Years of overzealous tax foreclosures has brought the city a decade of deed scams with no end in sight. And the wrongdoers are rarely apprehended for wrecking people’s lives.

It Started With the 2007-2009 Housing Crisis

From 2007 to 2009, Detroit homeowners lost their houses in droves. County authorities foreclosed in one in every three homes in the city, over (sometimes minor) overdue tax bills. Today, most Detroit residents don’t own their homes.

Some foreclosed homeowners never told their renters they lost their titles. Some left their homes empty for opportunists to break into and use for profit. Such opportunists can be extremely well equipped — using fake identities when selling or renting to unsuspecting people.

Lenders avoid Detroit these days. Most homes are purchased for cash. Without an underwriter involved in a deal, title searches don’t happen. If there is no title search, how can the person who acquires a deed be sure the person who transfers it has that legal right?

Deed fraud can impact older and cash-strapped people, those who receive deeds without warranties, renters who pay someone other than the real owner, and many others. The basic chain of ownership is visible at the county recorder’s office; each home has a searchable title. Find out about the title search, and how it prevents fraud.

Some residents try to buy homes through contract for deed (rent-to-own) promises. And all too often, the rent is collected by someone who has no right to sell the house. In some cases, multiple deeds exist for a single home. There are plenty of cases in which two different people, both thinking they have a valid title, send contractors out to renovate the same home. In the inevitable clash of the deeds, the renters caught in the middle can wind up on the street.

Renting to Own – And Then Left Hanging

A person sitting in deep thought about their rent to own situation.

NBC News and Outlier Media spoke with June Walker, who signed a “lease with an option to buy” in February 2019. The house had no plumbing, no electricity, broken windows and a flooded basement. Walker did the necessary work to turn the house into a home. Eventually, she reached her life’s big milestone. She made the final payment on the contract. When she called the seller to officially receive the title to the home, he agreed to get together — then ghosted her. The money she had paid in monthly rent was gone, too.

A few weeks later Walker got called into court for trespassing.

The owner of record when Walker moved in was RHMS Group of Pennsylvania — the owner of dozens of other Detroit houses as well. RHMS sold the house to a business registered in Florida under the name Boccafe LLC. Boccafe filed to evict the person occupying the house, without knowing that this same occupant was faithfully paying rent for three years.

Because Walker wasn’t paying the owner — or, apparently, a party with connections to the owner — all that rent money, all those funds spent on repairs to the home… they don’t mean a thing. Walker could approach Boccafe to work out some kind of new contract. But Walker has no rights or leverage. Legally, Boccafe bought the house. It didn’t sign up for a renter with the deal.

Wait, you might say. Wasn’t Walker in possession of the house, openly, continuously, for years? It was obvious to anyone who looked that Walker occupied the house and invested in it as a primary residence. Isn’t there a case here for adverse possession? The problem is the period of years that Walker would have to live in the house, by statute. To claim a right to the title through adverse possession, June Walker would have needed to live in the house for 15 years under Michigan law.

Obtaining home ownership by adverse possession, whether it’s foreclosed or abandoned home, is difficult. It takes a long time under the laws of the various states. See more about adverse possession here.

Looking Ahead: Who’s in Charge Here? Because This Problem Isn’t Going Away

Image of the Detroit Michigan skyline with the sun in the background.

Outlier and NBC News spoke with eight defrauded residents. Only one had tried to get support from official sources. Why? The level of resignation and distrust is palpable. “This is Detroit,” the view seems to be. This is what happens here.

June Walker thinks Detroit must create a fund to help scammed residents, rather than letting them be pushed out to the streets.

What does the city currently have? There’s the Detroit Land Bank Authority, formed to rehabilitate abandoned real estate. With thousands of houses, the Authority is Detroit’s biggest land owner. Residents of homes who need to straighten out their titles can get a remedy from the Authority. But it obviously can’t keep its titles safe and sound. There’s just one staff member assigned to investigate fraud reports.

The mayor told the news team to talk to a city lawyer — who had nothing substantive to say in response.

Scammed residents fear the people who have swindled them. Some fear the police as well. Others are homeless or otherwise just too busy surviving to think clearly. Many rightly assume no one is prepared to help them, given that swindlers are so hard to track down. And, all too often, the police regard the victims as squatters, and chase them out of the houses on behalf of distant companies. Rarely are the victims of fraud viewed as renters with recourse to due process in the eviction process. Prosecutors only act in cases where fraudulent deeds are actually recorded. Very few cases result in convictions.

Detroit’s fraud problem needs answers. We’re heading into winter.

Millions of U.S. homeowners are finished with their pandemic-related mortgage forbearance periods. Thousands of these borrowers live in Detroit. Their coming crisis will result in more foreclosures. More empty houses.

Protect Yourself, and Help Others Do the Same

Those who stay in their homes to fight off their debts may be vulnerable to scammers with no qualms about lying to get them to sign over their titles. As the Federal Trade Commission warns homeowners:

“Never pay a company upfront for promises to help you get relief on paying your mortgage.”

Watch out, too, for people (other than the mortgage servicer or lender itself) who say they can stop a foreclosure. Such promises are typically tricks.

Learn more about housing scams. Then tell others. NeighborWorks® America has a housing scam prevention toolkit your organization can use to help raise awareness in your area. Help if you can.

Supporting References

Mich. Comp. Laws Ann. § 600.5801: 600.5821 Recovery of land or public ground; period of limitations; personal actions; maintenance, care, and treatment of persons in state institutions.

Erin Einhorn (NBC News, Detroit) and Aaron Mondry (Outlier Media, Detroit): The “Fake Landlord” Scam Destroys Lives in Detroit. But Culprits Rarely Face Consequences (updated Nov. 18, 2021).

Matt Carter for Fake Landlord and Deed Fraud Scams Plague Detroit Buyers and Renters (Nov. 12, 2021).

Jessica Dupnack and David Komer for Fox 2 Detroit: Fake Deed Scams in Detroit Real Estate Are on the Rise (Oct. 6, 2021).

NeighborWorks® America: How to Spot a Home Scam (2020).

Photo credits: The DigitalWay and geniuserp, via Pixabay; and Liza Summer, via Pexels.