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States Fight Foreclosure Rescue Scams

'Rescue' schemes often make matters worse for troubled homeowners



January 21, 2008

Foreclosure
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News
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Florida Governor Signs Foreclosure Rescue Law
California Busts 'Land Grant' Foreclosure Scam Artists
Foreclosure Filings Up a Record 65% in April
White House Threatens To Veto Anti-Foreclosure Bill
Fed Chief Seeks Greater Effort To Stem Foreclosures
Realtors Frustrated by Banks' Lack of Interest In Short Sales
Bank Of America Tries To Stem Rising Foreclosures
Foreclosure Efforts Lacking, States Find
California Foreclosures Surge 327%
March Foreclosures Up 57%
Homeowners Raiding Retirement Accounts to Avoid Foreclosure
'House Stealing' Scam Combines Identity Theft, Mortgage Fraud
Foreclosure Filings Up 57 Percent In February
Senate Will Try To Override Veto Of Foreclosure Bill
Foreclosures Up In Most Urban Metros Last Year
ACORN, Countrywide Tweak Subprime Relief Plan
Foreclosure Prevention Efforts Falling Flat
States Fight Foreclosure Rescue Scams
Mayors Warn Homes Could Lose $1.2 Trillion In Value
Foreclosures Spike in More Metro Areas
Searching For Foreclosure Bargains Can Be Costly
September Foreclosures Double Year-Ago Levels
August Foreclosures Up 115% Over Last Year
Foreclosures Continue at Record Levels
Feds Urge Lenders To Help Stave Off Foreclosures
Foreclosures Surge 93 Percent In One Year
New Jersey Man Cited For Exploiting Foreclosure Victims
North Carolina Shutters “We Buy Homes” Scheme
Predatory Lending Bill Back in Congress
Groups Seek To Roll Back Foreclosures
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U.S. Foreclosure Rate Surges 47 Percent
Regulators Urge Mortgage Lenders to be Flexible with Homeowners
California Foreclosure Notices at 10-Year High
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Realtors: Home Prices May Dip This Year
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The wave of foreclosures has brought even more pain to some strapped homeowners – a wave of mortgage rescue scams. Some attorneys general are gearing up to counter these fraudulent operations.

In Iowa, Attorney General Tom Miller has drafted a package of legislation providing new safeguards to people taking out mortgages.

Miller's package also contains a bill that directly addresses mortgage foreclosure rescue fraud – scams that prey on people facing foreclosure by asking them to pay hundreds of dollars for so called assistance or "rescue" from the danger of foreclosure.

"The problem is these 'rescue scams' just take people's money and fail to do almost anything to help them avoid foreclosure," Miller said. "And they take precious funds from people who are vulnerable and who can least afford to be cheated. This is the definition of adding insult to injury."

Dan and Patricia Potter, Des Moines residents who were the victims of a questionable foreclosure "rescue" scheme, joined Miller at a news conference last week.

The Potters were in danger of foreclosure, and paid $795 to a company that claimed it would set up arrangements to help them stay out of foreclosure. But Miller said the company made no attempt to make the arrangements, and then insisted on another $500 payment. The Potters were able to recover about half of the $795.

"Foreclosure rescue scams are just starting to appear in Iowa," Miller said. "It's a symptom of the overall climate of an avalanche of foreclosures here and all over the country. We need this legislation to prevent the problem flaring up here as it has in many other places," he said.

In Indiana, Attorney General Steve Carter filed a lawsuit against Indianapolis-based Capital Foreclosure, Inc. seeking nearly $20,000 in restitution for customers and an injunction to halt the company and its operators from illegal practices.

"Some people lost their homes after placing their trust with this company," Carter said. "The company exploited the vulnerability of its customers who faced foreclosure."

Carter says nearly 20 people sought "foreclosure rescue" and credit counseling services from Capital Foreclosure and its operators, Eriq Brye, Kenneth Brye and Sallie Brye. Individuals paid fees and other costs that ranged from $40 to as high as $4,100.

The attorney general's office is seeking customer restitution totaling $19,176 and penalties and costs of up to $5,500 per violation.

Miller, meanwhile, says foreclosure rescue scams take money people desperately need to address their foreclosure situation, and they may cause people to delay authentic efforts to modify a mortgage and come to terms with lenders that the borrower can afford.

"Some rescue scams specifically tell people not to contact their lender or loan servicer, and that can just make matters worse," he said.



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