I found this news item about two Bay Area foreclosure scammers recently sentenced to prison for their crimes.

The two women were running a scam where they have homeowners deed an interest to a shell company so the scammers could stall a foreclosure by filing a phony bankruptcy in the name of the shell company. Usually, the scammer will tell the homeowner that the deeded interest is required because then the scammer can negotiate with the bank as an owner on title. Lenders usually get out of the phony bankruptcy and proceed to foreclose on the property.

The two convicted scammers were charging homeowners from $1500 to $2500 a month while running the scam. The scammers made other false promises to homeowners, including claims that they could repair homeowners' credit. They found their victims through direct mail campaigns, getting addresses from Notice of Default records.

The two saddest facts from this story:

1) these scammers were taking in over $170,000 a month when they were charged back in March, and

2) through a plea bargain, the scammers have to make restitution to their victims, but they will only serve a maximum of 16 months in prison.

I think they got off too lightly, given the fact that these two are likely responsible for hundreds of people needlessly losing their homes.

For homeowners, here's the moral of the story: if you are in foreclosure, get proper help. Most scammers will send you direct mail, call you, or even knock on your door. In contrast, legitimate help usually requires you to do the legwork, so beware of people contacting you. Also, remember what you learned as a kid: if it sounds too good to be true, it probably is.

There are legitimate solutions available to homeowners, from legitimate sources, that are usually much less expensive than these scams. As an example, my flat fees for services to homeowners in trouble are usually less than the first monthly fees that the two scammers above were charging, so shop around.