What Is a “Phantom Help” Scam?

A “phantom help” scam is one of the most common types of real estate and mortgage fraud in California. In the real version of these scams, someone preys upon unsophisticated homeowners or buyers during a vulnerable moment. However, some legitimate business practices can get caught up in phantom help scam allegations. There are three main types of phantom help scams that vary based on where the victim is in the homeownership process.

How Is a Phantom Help Scam Defined?

California law explicitly bans phantom help scams as part of its code against foreclosure fraud. Often referred to as “phony counseling” scams, phantom help occurs during real estate transactions.

When running a phantom help scam, the scammer positions themselves as a knowledgeable and helpful professional who will aid homeowners or buyers through the complicated mortgage or foreclosure process. The scammer will present their services as a consultant who can guide the victim for a small price or role.

However, what the alleged consultant claims are their services turn out to be untrue or phony. These scammers are committing crimes because California criminalizes any knowingly false statements during any part of the mortgage or real estate transaction process.

Types of Phony Counseling Scams

Typically, a phantom help scam follows one of three methods.

• Foreclosure Scams

In the first case, a homeowner will be facing foreclosure. Generally, all they will care about is keeping the house. They will meet someone advertising themselves as a foreclosure expert, specialist, or consultant. The homeowner will pay the consultant an upfront fee in exchange for work towards preventing the foreclosure. If it is a scam, the supposed consultant will do little to no work helping the client and simply pocket the fee.

However, just because a consultant fails to prevent foreclosure does not mean they committed fraud. Many legitimate services do attempt to help homeowners keep their house and are not scammers.

• Mortgage Modification Scams

The second common type of phantom help scam also victimizes homeowners facing foreclosure. In these cases, the so-called expert or consultant will convince the victim they are dealing with the bank or mortgage company on the victim’s behalf. Therefore, the victim should make their monthly payments to the scammer directly. The criminal cashes the checks without attempting to pay or resolve the homeowner’s problems.

• Deed Scams

The final version of a phantom help scam involves unprepared or unsophisticated homebuyers. The scammer will provide the buyer with a deed to a home in exchange for a down payment. Sometimes, they will also collect months of mortgage payments. However, the deed is phony, and the victim will be evicted when a legitimate buyer moves in. Often, the scammer never possessed title to the property.

Penalties for Phantom Help Scams

California prosecutors investigating phantom help scams can allege your actions were criminal either by saying you committed foreclosure fraud or grand theft. Either way, they can charge you with a felony or a misdemeanor. The severity of the charge will depend on the facts of the case and your criminal history.

As a misdemeanor, a conviction for a phantom help scam could land you up to a year in county jail and a $10,000 fine. However, as a felony, you could spend up to three years in jail. Additionally, if the amount you defrauded or stole is over $65,000 or $500,000, additional years can be added to your sentence, and they can be spent in state prison.

If you have been accused of committing a phantom help scam in Westminster, California, you will need a dedicated legal team. Contact the attorneys at Chambers Law Firm to hear how we can help. You can start with a free consultation by calling 714-760-4088 or emailing dchambers@clfca.com.