Homeowners in default receive so many phone calls, people knocking on their doors and letters that it can reach the point of harassment. Some of these offers for help are legitimate but many (most) are not. For the average homeowner it is next to impossible to tell who is on the level and who is not. In Part I of Ventura County Fights Back...Stopping the Real Estate Scammers I told you that scammers do not look or act dastardly. This was a theme repeated over and over by all three panelists. Scammers are charming. They are mothers, fathers, church goers, and often people you know and trust. More appalling to the audience was they could be a real estate agent-even the agent you used to purchase your home.
If you understand the real estate laws that apply to homeowners in default it becomes a lot easier to sort out the genuine offers of help from those who seek to take advantage of you. Stella Ling, with the California Association of REALTORS, (C.A.R.) went over the Foreclosure Consultant Law. This law is designed to offer protection to owners of properties (1 to 4 units) that are in default from people or companies providing foreclosure related services for compensation. Licensed real estate agents are generally exempt from this law but there are there are some guidelines. If a real estate agents is doing something outside of what they usually do in the course of a real estate transaction the law may apply.
- A real estate agent cannot acquire an interest in the property.
- If the agent makes a direct loan to stop the foreclosure, the law applies.
- If an agent charges an in advance for services, they must get the contract preapproved by the California Department of Real Estate. (Stella says noone, to her knowledge, has this type contract approved, so if an agent asks you for an advance fee, chances are almost 100% that they are breaking the law.)
For foreclosure consultants that are not real estate licensees, some of the requirements are:
- Written contract with a 3 day right to rescind.
- Consultant cannot acquire interest in property.
- No money can be paid until services are fully performed.
To be safe, don't sign anything without getting a second opinion from an appropriate and qualified professional. Ask for proof of results and references. And most importantly, always remember that if it sounds too good to be true it probably is.
We were told about an excellent video on Real Estate Scams published by FreddieMac on YouTube to help educate the public. You can view it here.
Miles Weiss, Senior Deputy District Attorney in charge of the Real Estate Fraud Unit here in Ventura County told the audience about some of the scams that are happening right here in the county. Scammers are promising loan modifications and charging upfront fees without any results. Miles says there is about 0% change of them being able to deliver results. Another scam involves deeding a 1/8 interest to a shell company that will file for bankruptcy to forestall the foreclosure. The county recorder is sending his unit any such suspicious documents for investigation. He encouraged the audience to report any suspicious activity to his office by visiting the Ventura County District Attorney website and filling out a real estate fraud complaint form.
Miles acknowledged that the problem is huge and he and his staff have limited resources. As such, they go after the most serious cases first. It is still important to report all suspected real estate fraud even if the DA is aware of it since you may be the one to supply the missing piece of information that solidifies the case.
To wrap things up, Miles talked about another class of victims; renters. Real estate scammers often rent out homes that are in the tail end of foreclosure. They collect deposits and rent without disclosing that information. Then the bank forecloses and the renters are out on the street having lost all the money they paid to the scammers. These types of scams are proliferating on sites like Craigslist, so be careful and do your home homework.
This article is intended to give you a general overview of the problem but cannot address everything that might apply to an individual situation. Always consult an appropriate professional. If you have any specific questions, call or email me.