The New York Senate and Assembly are considering legislation to protect vulnerable homeowners from "foreclosure rescue" scams. Seniors and low-income homeowners have been defrauded out of their homes by a growing array of companies and individuals that prey on homeowners facing foreclosure.

Posing as "foreclosure rescuers," unscrupulous individuals and deed transfer companies target seniors and lower income homeowners on the brink of foreclosure. Typically, they promise to bail homeowners out of foreclosure by paying off the arrears on the outstanding mortgage. Homeowners end up signing over the deed to their home to the company, and are told they may rent their home until they are able to buy it back.

The purchaser, however, has no intention of leasing the property back to the homeowner. Instead, the purchaser evicts the homeowner within months after the transaction and walks away with equity the homeowner had built up - -- sometimes as much as hundreds of thousands of dollars.

New York homeowners who lost their homes to deed theft and community groups testified at a hearing on legislation introduced by state Assembly Banks Committee Chair Catherine Nolan that would prohibit deed transfer scams. State Senator Hugh T. Farley, chair of the Senate Banks Committee, recently introduced a parallel bill in the Senate.

"Unfortunately, we have seen a growing number of these 'deed theft' scams in New York and throughout the country," said. Farley.

"AARP commends Senator Farley and Assemblywoman Nolan for their leadership in proposing legislation to stamp out deed theft scams," said Muriel True, AARP member and Regional Advocacy Coordinator for AARP New York. "Any form of predatory lending must be stopped especially when targeted at older persons and other vulnerable homeowners in New York State."

"Deed theft is becoming a serious epidemic in New York -- the number of calls we receive from people who have lost their homes in these scams has risen dramatically in the last two years. Low and middle income homeowners who are targeted lose all of their equity and are evicted from their homes, while unscrupulous speculators who are completely unregulated by the state are stealing millions," said Josh Zinner, Director of the Foreclosure Prevention Project at South Brooklyn Legal Services.

Deed theft is also perpetrated on homeowners when they go to close on a refinancing mortgage. Buried in the thick pile of papers signed at closing are documents that authorize transfer of the deed to a third party. In these instances, the homeowner does not even know she has ceded the deed to another party until considerably after the fact.

"My husband and I were tricked into signing documents when we were refinancing our mortgage to save our house from foreclosure. My house was stolen through deed theft and my family almost ended up in a shelter because of this," said Michell Fayez Olabi, a mother of six who, with her husband, is fighting to get her home back in the Rosedale section of Queens. "Deed theft is a crime and it destroys families. My family is still suffering. The dream that we had for our home was taken away by these crooks."

The bills would require written disclosure to homeowners regarding the terms of the title transfer, and provide a right to cancel the deal for five days after signing the contract. They would prohibit making false statements regarding the home's value, the foreclosure process, and any contract terms. The legislation also would establish civil and criminal penalties for violating the law.