This is ugly. The FBI has announced more than 500 arrests in what’s known as a “straw buyers” scam that has probably contributed towards Nevada having one of the highest foreclosure rates in the nation. That’s because the center of the scam seems to be Las Vegas.
Let’s talk about straw buying for a moment. What happens is that people will respond to an ad in the newspaper that talks about buying properties. They hook up with a company that promises to not only help them buy properties, but those properties will be in the buyer’s name. It looks like a great deal for the buyers, but they don’t know what the company they’re working with is up to.
What they’re doing is using the buyer’s information and inflating numbers. They’ll find a way to inflate the worth of the homes to get the highest amount of money possible. Then they’ll rent the homes to others at a higher rate, based on the perceived worth of the home, and they’re supposed to pay the bank. They even might pay the banks for awhile, but eventually they’ll just take the rent money and pocket it. Or else, they’ll use some of that money to purchase other properties in the homeowners name, doing this over and over until there’s a lot of homes in the buyer’s name. As long as the worth of the homes continues going up, things might be good. But once the worth starts going down, these companies bail, leaving the owners to fend for themselves because their names are on the records, and since the owners often haven’t received any money from the transactions, those homes will end up being foreclosed upon probably and the buyers credit is trashed.
In this case, calling the case Operation Stolen Dreams, there are, so far, 123 people arrested for pulling this scam in Nevada, with losses estimated at around $250 million. No buyers have been arrested because almost all buyers go into this naive, thinking this is a legitimate business operation, and that’s probably the only good thing to happen to these people. Nationwide, there have been almost 500 arrests made. And the way the arrests were announced, it sounds like there are plenty more arrests coming.
Buyers always need to be aware of who they’re giving their information to. Check up on companies offering something that sounds too good, even to people ready to give you a loan towards purchasing a home.
Mitch writes on real estate, finance, and many other things. 
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