Foreclosures And Rescue Scams

November 27th, 2007

Rescue scammers are following foreclosure victims like a secondary infection dogs the heels of the primary disease. These scammers are the vultures of human society – ready to pick clean the bones of victims left to die by the foreclosure predator. These scammers bank on the inability of traumatized borrowers who are in no condition to think straight.

Desperate to somehow keep their home fires burning in their own houses the borrowers fall a easy victim to the smart talk and manipulations of scam artists who fall over with big promises to help them stave off foreclosures. Jim Sullivan, a Democrat from Wauwatosa is planning to introduce a bill to give some protection from these rescue scammers.

The scammer’s mode of action involves giving an assurance that in exchange of the property rights, the ex-owners can continue to reside until they can clear dues. The so-called helpers supposedly pay off the first loan and now the previous owner becomes a tenant and pays rent. But usually the new tenant ends up with eviction as the rent newly imposed turns out to be very high – often higher than the monthly mortgage payments!

The new bill proposes that the rescue schemes must be all put down on paper as written contracts. The ex-house owner will have the right to cancel it within five days of signing. It will also be expected of the rescuer to verify if the person concerned can afford the transaction fees. If, however, eviction does take place then he or she must get 82% of the market value of the house. The legislation will allow the ex-house owner to sue the scammer for fraud. During this period, evictions will be kept on hold for at least 90 days. Financial institutions are supporting this bill. Sullivan’s proposal is before a State Committee and he has bipartisan support.

The best thing is to educate the foreclosure victims so that they keep their cool even after the crisis and do not further mess up matters by relying on unknown help.

With foreclosures increasing there is a proportionate rise in scam artists sniffing around for gullible victims. It is at this point that legislation fails because no amount of law can teach you to read carefully the fine print and learn about rights. The best way is to seek bonafide help. The bill will add teeth to activities of counselors.

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