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Housing: Foreclosures

posted 15 March 2009
 
 

Obama Foreclosure Relief Plan may Lure Scam Artists as would-be Saviors


By Charles J. Kovaleski
 
 
Strapped homeowners should watch for rip-off tip-offs

Florida residents well know that scams wash in after hurricanes. Under the guise offering help, criminals arrive on the scene with promises of repair, economic assistance and needed resources. Damage continues – inside consumers’ wallets.

Today, the current storm lashing the Sunshine State is a historic wave of foreclosures born of a housing boom partially created by lax mortgage regulations that led to the approval of many dubious loan applications.

Foreclosure relief is needed statewide. That desperation breeds criminal intent. But when it comes to foreclosure rescue fraud, consumers can find protection when they consult with reliable real estate attorneys.

President Obama, vowing to help those who are underwater with their mortgages (consumers who owe more to their lender than the current value of their homes), recently reiterated in hard hit Lee County his pledge to provide foreclosure relief. Fort Myers and surrounding areas are the epicenter of the nation’s housing meltdown with the highest foreclosure rates in the country.

But concerns swirl around the idea that the $75 billion plan Obama unveiled to help borrowers modify their current mortgages may lure more foreclosure hucksters onto the scene.

“Given that mortgage fraud skyrocketed during the housing boom,” The Wall Street Journal wrote in a recent editorial, “and that the Obama Administration intends to assist up to 9 million troubled borrowers, we can say with certainty that the unscrupulous will be among those rescued.”

Some federal lawmakers worry that the president’s plan may be vulnerable to fraud. U.S. Sen. Charles Grassley (R-Iowa), a key member of the Senate Finance committee, has written administration officials requesting safeguards for taxpayer funds that are used for mortgage-modification programs.

Illegitimate companies take fees from consumers – often with promises that federal bailout money will provide a quick fix. Scamsters then make off with the ill-gotten fees, leaving homeowners worse than before.




A common mantra provides an easy test for most homeowners: If an offer sounds too good to be true, it probably is – as demonstrated by the video found here: http://tinyurl.com/bmhwuz.

More than 100 complaints of foreclosure rescue scams have been received by the Florida attorney general’s office in recent weeks. About a dozen companies have been sued.

Genuine assistance – often negotiated with the current lender – can help with loan restructuring, but the process is complex and cumbersome. To avoid predatory practices, consumers should enlist trusted real estate attorneys. Here are other tips:

Check out prospective rescue company: When considering a loan modification firm, check with the Better Business Bureau, your local chamber of commerce or the National Association of Mortgage Bankers. Negative information from any of these entities raises a red flag. So-called “loss mitigation companies” approach homeowners with phrases like “Stop Foreclosure Now!” or “We guarantee to stop your foreclosure!” Such come-ons are rip-off tip-offs. Consumers can also check with the Florida attorney general’s office (http://tinyurl.com/bdfudg), which recommends steering clear of these operations altogether.

Watch the paperwork: Anyone who insists that he or she will negotiate with the lender but only after you start making mortgage payments directly to them is suspect. It’s likely they’ll collect a few payments then vanish. Another twist is that they’ll convince you that the documents they’ve presented for your signature are for a new loan. Don’t fall for it. Have your real estate attorney review paperwork so that you don’t fall prey to surrendering your title to a criminal in exchange for a non-existent rescue loan.

Fake rent-to-buy proposal: It sounds plausible; the homeowner is told that he or she can remain in the home as a renter but must surrender the title as part of the deal. The fraudulent story is that the consumer can receive a better credit rating by signing over the title so that a new loan can be originated. However, the scamster draws up terms that are so impossible to meet that the house – and equity – are lost. Your attorney can determine whether the terms are favorable or fraudulent.

Beware the bankruptcy scheme: The phony rescuer promises to negotiate with the lender then – perhaps without telling you – files for bankruptcy in your name. The criminal then walks away with any upfront fees collected from the desperate consumer. Foreclosure is avoided – but only temporarily. Bankruptcy hearings are called but unsuspecting homeowners fail to show because they never knew of the proceedings. The filings can damage credit reports and job prospects.
 

 
CHARLES J. KOVALESKI
Charles J. Kovaleski is president of Attorneys’ Title Insurance Fund, Inc., (The Fund) the leading title insurer in Florida and the sixth largest title insurance company in the country. Acknowledged as the Florida residential real estate expert, The Fund has been in business for more than 50 years and supports a network of more than 6,000 attorney agents statewide who practice real estate law. The Fund, based in Orlando, Fla., underwrites more than 300,000 title insurance policies for owners and lenders in Florida every year. For more information, visit www.BrowardREC.com.
 
 
 
 
 
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