Watch out for 'Fastest-Growing' Real Estate Scam

Investors who thought they were getting into a real estate rental deal, got more than they bargained for in a scam that's affecting hundreds of home owners. The scam works like this. Investors are told they'll get an upfront payment in return for letting a company use the investor's good credit to get a house loan, a process called 'Straw-Buying'. Then without telling the investor, the scammers frontload the loan with cash and hidden fees they hide away, claim they can't rent the property, and leave the original investors with a mortgage that amounts to $30,000 to $50,000 more than the house is worth. The investor may be opening themselves up to some legal troubles for mortgage fraud as well since it's their name on the dotted line.

The exuberance of the pre-housing bubble burst days made scams like this easy to run and the extent of the damage is just becoming widely known.

This story on Local 6 offers some good tips on how to avoid being caught in this scam. But they're mostly common sense. You don't get something for nothing. Always read everything you sign. Get independant advice from a qualified Real Estate professional before entering into any real estate investor deal.