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Mortgage scam traps expats seeking a good return

by Garland M Baker on September 29, 2008

Looking for high interest on money? There are loan brokers in the local market with customers looking for cash. Some of these brokers are even lawyers representing their clients.

Watch out. There is a scam which preys on anyone willing to lend their hard-earned savings. It is a trap for those blinded by money and eager to beat the interest they are getting at the bank or on certificates of deposit.

This is how the swindle goes.

First step, finding the right property to use in the scam.

Scamsters look for a property that has not moved for years in the database of the Registro Nacional. Even though quite a bit of information is available online via the Registro’s Web site, it would be very time consuming to find a list of properties not moving without some inside help.

However, it is very easy to get property information without an owners permission on individual parcels. Asking neighbors of an unkempt property is a good starting point. If they say the owner has not been around for a while, the next step would be to check the movements at the Registro to see if the property has shown any activity. If not, the next place to check would be obituaries and immigration information to see if the owner is either dead or out of the country.

This process can also be done in reverse by looking up property records for people that have died or are out of the country. If a match is found, it is important to know how long the person has been dead or gone. Finding information about Costa Ricans is easy. Almost anything one wants to know can be found at the Tribunal Supremo de Elecciones, the supreme electoral court also known as the Registro Civil. It is more difficult to find immigration information, but with the right contacts at immigration, the information is available.

Once the right property is found, it is time to go to the next step: transferring the property using a crooked notary. They are not that hard to find. Usually they are young and need quick cash.

Now for the third step, get the word out a loan is required. There are many advertisements in the local papers for loan brokers. The loan brokers look for lenders for a fee. Usually a high interest rate is offered like 18 percent or more, and the borrower offers three months advance interest. Expats fall for the gimmick because expats like to lend their money for high interest so they can live off the proceeds. The multitude of expats involved in the failed high-interest loan operations once very common in Costa Rica are a good testament to this statement.

When the lender/victim shows up with the cash, the transaction is made with the crooked borrower. From the funds being loaned, three months interest is taken from the proceeds and given back to the lender as prepaid interest. He or she goes home happy thinking they have made a good deal. They do not know the property was not really owned by the person borrowing the money.

Three months go by and no more interest is paid. The borrowers disappear and the lender goes to an attorney to try and collect. The lawyer finds it impossible to find the scamsters. In some cases, legal proceeding are already in process by the legitimate owners or their heirs to get the property back.

Even in the best of cases, the chances the person lending the money will get it back are very remote. Usually, the people involved are seasoned criminals who know the ropes. They know that eventually the property will revert back to the original owner and probably no one will try very hard to catch them. Even if they are accused by the court, they most likely will not do any jail time. Many cases like the example here just expire and the bad guys get off with the crime.

Expats that get caught in this kind of scam are usually scammed again by the legal professionals they hire to protect them. The lawyers tell them they have good hopes of getting their money back and collect a handsome fee up front. In most cases, the truth is they will never get their money back and spending anything to fight to do so is just throwing good money after bad.

Why is it so easy to hoodwink people into dubious financial transactions? It appears just to be human nature. Everyone wants to find the gold at the end of the rainbow or the lost treasure of Sierra Madre. Some expats who come to Costa Rica to live out their retirement years are easily sucked into the most preposterous of schemes. Most of them just want to find a way to augment their retirement and others are just blinded by money and do not make good decisions.

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