Foreclosure Scams: Trust Agreements

The Trust Agreement scam is similar in nature to the Escrow scenario.

What is a Trust? Wikipedia.com defines a trust as an arrangement whereby money or property is owned and managed by one person (or persons, or organizations) for the benefit of another. A trust is created by a Settlor, who entrusts some or all of his property to people of his choice (the Trustees). The trustees are the legal owners of the trust property, but they are obliged to hold the property for the benefit of one or more individuals or organizations (the Beneficiary), usually specified by the settlor.

Here’s how the scam works:

Investor offers to bring your loan current.
Investor charges $1000 (or a similar amount) to pay all legal fees for setting up a trust.
The trust is set up as “66 Lincoln Street Jones Family Trust” (assuming your name is “Jones”, and you live at 66 Lincoln Street).
The deed names the investor’s company (ABC Investments, Inc.) as the Trustee.
The deal is structured so that once the loan is repaid (plus a management fee), the trust will then deed the house back to you.

Can you see the scam working?

In this scenario, it is very easy for an investor to put you at ease and use “trust” to con you out of your home. You assume that because the trust is named for your home and family, you have a controlling interest. In truth, ABC Investments, Inc, controls the trust, and THE TRUST NOW OWNS THE HOME. You have just given your property away, but you are still obligated to pay for it. Miss a loan payment? You are evicted, and you have no legal ramification, because you no longer own the home.