Can people actually “scam” the equity out of your home? You bet they can. Today, the most targeted group of people for these types of scams are the elderly. Usually older individuals are retired and live off of social security, which doesn’t give them a lot of financial leverage. You may ask, “so why target them”? Well, generally they own their homes outright and they are completely paid off, which makes them very income poor but land rich.

Fortunately there are many federal and local laws that protect people from equity scamming, but the best protection you can have is knowledge. Armed with the correct knowledge you don’t have to rely on the laws and you won’t end up falling for the scam in the first place. Here are three different types of scams you should look out for.

Home Repairs – This type of scam is the most common. Most often charming “door to door” salesmen persuade the homeowner that they are need of a home improvement loan to fix often unneeded repairs. These salesmen are often in cahoots with unscrupulous lenders. The type of loan they sign always carries a high interest rate and other ridiculous charges. The monthly payments required by the new loan are often to much for the homeowner and the end result usually ends in a default of the loan or even foreclosure. What’s worse, is the contractors that are hired to do the work usually don’t complete the jobs, and the work they do is often shoddy and sloppy.

Refinancing Scams – The most popular way homeowners choose to fund their home improvement projects is through refinancing the equity in their homes. Many brokers take advantage of this and refinance with loans the home-owner usually cannot afford. The broker collects all the commissions, upfront fees, and closing costs that coincide with the new loan. Often times the broker will persuade the borrower to take out more cash than needed and end up paying higher monthly payments, often resulting in a default of foreclosure.

Deed Forgeries – This is a very sneaky tactic scam artists use to forge the home owners signature on a blank grant deed that, in essence, transfers ownership of the property to the criminal. The other information that is required to transfer the ownership is usually available through public records. The crooks then take the phony documents to the bank and take out equity against the victim’s property before they even realize they’ve been defrauded. Fortunately new laws are being passed that required a notarized thumb print to properly sign a deed.

Although I’ve only listed three ways criminals can scam people out of their equity, there are many other tools crooks have at their disposal.