It is hard to find a tragedy in the world that some heartless rat can't find a way to exploit and the current and growing incidence of foreclosures doesn't violate the rule.
Foreclosure fraud is not new - as far back as the spring of 2005 the National Consumer Law Foundation published a 68 page report on incidents they had investigated in every state of the union and the FBI recently published its Mortgage Fraud Report for 2006 which said in part:
"Recent statistics suggest that escalating foreclosures provide criminals with the opportunity to exploit and defraud vulnerable homeowners seeking financial guidance. The perpetrators convince homeowners that they can save their homes from foreclosure through deed transfers and the payment of up-front fees. This "foreclosure rescue" often involves a manipulated deed process that results in the preparation of forged deeds. In extreme instances, perpetrators may sell the home or secure a second loan without the homeowners' knowledge, stripping the property's equity for personal enrichment."
While foreclosure scams vary, they may be used in combination with other fraudulent schemes. For instance, perpetrators may view foreclosure-rescue scams as a new method for fraudulently acquiring properties to facilitate illegal property-flipping and equity-skimming.
Keep in mind that this reflects life as we knew it during the real estate "bubble." One can only imagine how much worse it is now and how much more ugly it is likely to become as more and more homeowners are or are likely to be unable to make their monthly payments.
Several of the regular and cable news networks have done stories on the problem in recent weeks. One reported that the Attorney General of North Carolina had banished one foreclosure "rescue" company from doing business in the state (the proprietor moved just a few miles from Charlotte across the South Carolina border where he continues to operate freely.)
Another network interviewed several people who had fallen for offers to "save" their homes and found themselves not only foreclosed but out of substantial funds they had advanced in hope of being saved.
Homeowners who are delinquent on their mortgages really are sitting ducks. Foreclosures are not done quietly or privately, and the embarrassment factor can be an important motivator. First they are advertised in the local paper, sometimes for weeks before the actual auction. These legal notices contain all of the particulars of the mortgage - date, original amount, a legal description of the property. It doesn't take someone interested in the property - legitimately or not - long to arrive at a fairly accurate figure for the current mortgage balance and only a quick trip to the county assessor and the registry to determine what other secured liens may encumber the property. And there in a heartbeat is an approximate equity value - a number that can inform the scammer of the best way to proceed.
Also, as a matter of public record lists of delinquent homebuyers can be purchased for mass mailings. These are usually broken down by 30 day, 60 day, and 90 day delinquencies - some lists even come with mailing labels.
So finding and contacting a troubled borrower is pretty easy, but how do these foreclosure scams work and how are home owners so easily duped? Is there no way for a homeowner in active foreclosure to salvage something, if only the shreds of their dignity and their credit rating?
There are legitimate companies who counsel desperate homeowners and others who buy properties out of foreclosure on the up and up. The trick is separating the scammer from the investor who may be able to legitimately bail out the homeowner, probably through a short sale.
Comments(3)