Behavioral economist Dan Ariely explains the phenomenon this way: "If you think about it, people are quite trusting."
There are "wonderful things about this trust," the Duke University professor said Thursday. But as recent history shows, the human tendency to believe isn't necessarily a plus when it comes to mortgages or real estate.
This, dear readers, is a plea for more wariness.
Anything arriving in your mailbox concerning real estate or home loans should be viewed with great skepticism, say those dealing with the fallout of the real estate crisis. Ditto for phone solicitations.
"I would highly recommend that they don't respond to that, especially on the phone," said Pam Canada, executive director of nonprofit loan counselor NeighborWorks HomeOwnership Center of Sacramento.
Stories have poured into Home Front for years from people who responded to phone or mail pitches for loans or loan modifications, only to see those deals go bad. Stories of misplaced trust even involve people who got deals from people they knew through church, or those who talked about faith while coaxing them toward a dotted line.
But in every story there's a point where it becomes the same story. Somebody called on the phone with an offer to lower monthly payments. Somebody sent a card offering to modify a loan. They came across as sincere-sounding people, people who sounded like friends, who sounded like they cared, and who reeled their targets right in.
"A majority of the scams that we've uncovered used the types of solicitation you're talking about, direct mail and telemarketing," said Tom Pool, spokesman for the California Department of Real Estate. "There are reasons to be leery or cautious when contacted by those means."
After hearing so many tragic stories in this real estate crash, it's hard to fathom why so many consumers respond to phone and mail offers.
Ariely, author of "The Upside of Irrationality," said one psychological reason is that "people hate to give up opportunity." If someone calls and says all their neighbors are lowering their payments to make their lives easier, it will trigger this feeling, he said. "They feel bad about not participating."
Older people are vulnerable because they remember more positive aspects of a sales pitch, Ariely said.
"There is evidence that shows as people get older their initial thought process goes from being more negative to being more positive. As people get older, they start focusing on positive stuff," he said.
"There's a study that says if you show young people 20 pictures, where some are nice and some are terrible, they remember the terrible ones. The old people remember the positive ones."
Canada said people respond to phone and mail pitches because "they're very desperate and grasping at anyone. These people say they can stop your foreclosure, get your loan modified and save your home. It's just human nature to reach out to any straw that might be out there."
Many of her clients walk in the door having sent money in advance to scammers, "finally realizing they won't get their money back."
Her advice is simple: Steer clear of phone and mail pitches about real estate and mortgages.
Remember, too, what Ariely said about human nature: "Trust can be very ineffective when people don't deserve our trust."
--Call The Sacramento Bee's Jim Wasserman, (916) 321-1102 or email him at [email protected]. Read his blog on real estate, Home Front, at www.sacbee.com/blogs.